new York The furnishings are exquisite, the location selected. A hundred-year-old wooden floor, stucco on the ceiling and a porter who takes interested parties up to the apartment door in the elevator – This is what the apartment at Central Park West 271 in New York offers. However, the dream of 240 square meters has its price: the sellers are asking $4.35 million for the apartment on the expensive Upper West Side, whose residents look out on gnarled trees in the famous Central Park, currently bare and covered in snow.
However, this did not detract from the demand. The contract for the apartment was signed eleven days after the first ad – for as much as $4.6 million. Despite the pandemic, the New York real estate market has long been making a comeback. In 2021, there were over 15,600 graduations in Manhattan – more than ever before. The trade in living space in the city is extremely fast-paced at the moment, says Sebastian Steinau. He is a broker at Corcoran, a real estate company that brokers high-priced properties internationally.
This is a surprising turn of events. “Many thought the New York market was over,” says Steinau. Just a year ago, industry experts assumed that local trade would recover for several years. In spring 2020, the city was a global corona hotspot. Many New Yorkers moved out of the city, the US borders were closed, and hardly anyone bought or rented.
Since the spring of 2021, however, the market has turned. “Many investors have been waiting for a crisis like this.” In total, real estate with a total value of 30 billion dollars was sold in New York in 2021. Primarily local families have now begun to buy in their own town. A New York family will also move into the apartment on Central Park.
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After just eleven days, the Apartment am Central Park is off the market again.
So far, however, demand in the metropolis has been concentrated on a few segments. Luxury real estate in particular is booming again, because there are also interested parties from abroad. Steinau reports on the first buyers from Germany, Austria and Switzerland. The market has great potential after the downturn: “At the moment there is high-quality inventory at a good price,” says the expert. New York is of course always expensive, but at the moment real estate for the city is cheap.
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“During the financial crisis, we should all have bought. And now the time has come again,” he says. Inflation is also an important motive for many buyers. They therefore invested in stable tangible assets such as residential real estate. And the upswing continues: In November, the national borders of the USA finally reopened – international investors who are willing to buy are now traveling to New York in search of suitable real estate.
The crisis has done the market good, it is generally healthier, explains economist Nancy Wu, who analyzes the real estate market for the American portal Streeteasy. Now the price is again determined by supply and demand and no longer by artificially created pricing by overly optimistic sellers. She sees no sign of a real estate bubble.
Rents in the Big Apple have also bottomed out. In February 2021, there was still a vacancy rate of almost twelve percent in Manhattan, which put significant pressure on rents. However, the times of crisis are over. In December, the vacancy rate was just 1.7 percent of Manhattan apartments, according to a report by real estate agency Douglas Elliman.
Building with porter asked
The average rent for an apartment in Manhattan is now $4,400 – an all-time high. “The market has crept back out of the abyss and is out of the pandemic era,” observes Jonathan Miller, real estate appraiser and author of a market report for real estate agency Douglas Elliman. “The current real estate market is the most polarized market I’ve observed in almost 30 years,” says Miller. In the city, the real estate segment can now be easily differentiated by buildings with and without gatekeepers. A building with a porter stands for security, because nobody can go in and out unseen – and buyers charge a fee for that.
In November, the national borders of the USA reopened – international investors are now traveling to New York.
(Photo: imago images/UPI Photo)
For buildings with a porter, the net cold rent increased by 7.7 percent compared to December 2019, so the market has fully recovered and has continued to grow. Simple apartments, on the other hand, are still 6.6 percent below the values of two years ago.
As a result, the market continues to split up. Apartments, which are primarily preferred by low-income earners, have suffered from extreme vacancy rates during the pandemic. As a result, landlords lowered rents in order to find residents for their apartments at all. So far, these rents have not recovered significantly.
“For lower-wage earners, the pandemic and its impact on the local economy has been far worse than it has been for higher-wage citizens. Because many of them hardly felt any economic inconvenience,” explains Miller. The fast-paced rental market is the mirror that reflects such social inequalities.
In December, the unemployment rate in New York was still almost 9 percent, compared to 4 percent in the US. Many workers in the city find work in the low-wage sector, but this is often dependent on tourism and business in the city’s economic centers. But there is still a state of emergency right there. Because while New York rental apartments are almost fully occupied, the situation in the heart of corporate America is very different. The city’s office towers are only about a third full.
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