With the retail real estate market in New York City been persistently bombarded by the COVID-19 pandemic, so much have been laid at stake here, according to a new report. The unsteady rental rates are not expected to take a positive leap anytime soon. Even after this pandemic, there’re some expected changes in the New York real estate market. What is left to decipher is how far can these changes go?
At the end of the first quarter, Q1 of the year, which started in January and ended on March thirty-first, NYC’s average retail asking rents encountered a progressive fall. According to the CBRE reports, an average of the City’s neighborhoods, surveyed showed a significant annual drop of 9% to$714 per square foot.
Also, the report showed that the Upper East Side and Upper West Side is experiencing a massive decline in rent. This is the tenth recorded serial drop in quarterly view of NYC retail real estate market and by far the worse. In Times Square, the bearish ratio is the highest for the first time since 2011. The previous year witnessed a 15.7% drop to $1,647 per square foot for average rents. Presently, the ratio stands below $1,800 per square foot, according to the CBRE report.
SoHo seems to be the hardest hit, as a corridor there now falls at 30.1% to $420 per square foot from $600 per square foot a year ago. Some of the most high-brow listings are up at a cheaper deal, as this is aimed at attracting buyers.You might just as well consult with your real estate attorney before closing off any real estate deal at this critical time. The report finally said posited that as long as social distancing and foot traffic is restricted, the retail sector will still be under much pressure.
Generally, in the real estate sector, the pandemic seems to have already generated a trend. If for anything, it enhanced an already existing pattern. For instance, the demand for online shopping is now at an all-time high. Diverse aspects of New York’s real estate business will be affected even after the end of this general health crisis.
The rental apartment sector should be ready to handle tenants who may have lost their income, and as such, unable to make coming months’ rents. So far, the US government has temporarily prohibited evictions. Major mortgage lenders have also suspended mortgage payments.
Although there’s generally peculiar regard of uncertainty in the real estate market after the virus has run its course, there are still some clear speculations. The ripple effect of this health crisis will greatly hit stores and restaurants and then down to real estate investors.
The longer-term impact of this national lock down in NY tends to be more beneficial to the single-family-built-for-rent business, as more people will now seek apartment spaces to set up office and work from home for a long time. The office sector so far seems more likely to suffer the most, as some workers may even negotiate the possibility of working from home permanently with their employers. However, all hope in increased demand in office space and the general retail business is not lost yet.