Commercial Real Estate News / Investing / 2022 Multifamily Market Report: New York City

2022 Multifamily Market Report: New York City

Published: 06-02-22 Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

In many ways, New York City was the epicenter of the COVID-19 pandemic. It faced strict lockdowns and limits related to controlling the virus.

As a result, many renters moved to other states, such as Florida, Tennessee, and Texas, leaving shortages within the workforce in New York City.

Additionally, an eviction moratorium made it difficult for multifamily investors and landlords to evict nonpaying tenants.

Fortunately, New York City’s eviction moratorium expired on January 15, 2022.

However, the combination of these factors has significantly impacted the multifamily market in New York City.

In this New York City multifamily market report, learn more about how the recovery efforts have impacted the city’s unemployment rate, population, and multifamily investment opportunities.

New York City Multifamily Highlights

New York City’s multifamily market is very different in 2022 than it was in 2019 before the COVID-19 pandemic.

Some highlights of these changes include:

New York City was the hardest-hit city in the U.S. when it comes to the effects of the COVID-19 pandemic;
A large number of people left the city to live elsewhere, leaving New York City with an unemployment rate of 9.4%;
Despite development plans stalling in 2021, 6,369 multifamily units are under construction in 2022;
Multifamily investment was higher in 2021 than in 2020, with $1.1 billion in investments.

Undoubtedly, multifamily investments in New York City will remain good ones over the long term.

This market is expected to show revitalization and renewed business.

The Pacing of Multifamily Rents in New York City

The average rents in the U.S. rose by 11.3% in 2021.

The cost of rent in each of the city’s 5 counties saw increases for a one-bedroom:

New York County from $1,599 in 2019 to $1,801 in 2021;
Bronx County from $1,599 in 2019 to $1,801 in 2021;
Kings County from $1,599 in 2019 to $1,801 in 2021;
Queens County from $1,599 in 2019 to $1,801 in 2021;
Richmond County from $1,599 in 2019 to $1,801 in 2021.

We can marginally expect this rent growth to strengthen over time.

Long-Term Changes in Rent

Rent is historically high in New York City, as there are limited opportunities for new developments and many things to do in the city.

Over time, rent is expected to return to its strong growth trajectory. Historically, New York City has some of the highest rents on the East Coast.

Short-Term Changes in Rent

Currently, rents in New York City have not grown as quickly as in other cities facing inflation, such as Tampa Bay.

There are many vacancies as many renters moved to other states. There are some new government initiatives aimed at trying to bring people back to living in the city.

Multifamily Sales in New York City

Many changes are taking place in the New York City multifamily market. These include the following.

Notable Acquisitions So Far

In mid-2022, a joint venture between Nuveen Real Estate, Taconic Partners, and North American Properties purchased the Ridge hill multifamily complex for $220 million.

Nuveen plans to make it a leading outdoor-style living space in the area with a multi-million-dollar renovation and rebranding project to improve the amenities.

Gaia, a leading investment firm in multifamily real estate, purchased three multifamily buildings for $49.5 million in the late summer of 2021.

Gaia is taking an active position after waiting for most of the COVD-19 Pandemic changes to calm the market.

All three buildings are adjacent to each other giving Gaia a big footprint in the area.

April of 2022 saw A&E Real Estate’s purchase of a luxury apartment tower in Manhattan for $307 million. It was purchased from SL Green, which had business with A&E earlier this year.

Rent-stabilized and market-rate apartments are included.

Leading analysts are confused about the purchase, although the company said it wanted to expand its options.

Notable Sales So Far

In the fall of 2021, Air Communities sold 11 multifamily properties. On top of this, Equity Residential and Avalon Bay are reducing their holdings in New York City.

Air Communities is new to the multifamily real estate market as it has only had three sales since it started. Investors are leaving markets prone to political influence.

Multiple high-value sales have happened lately throughout New York. Neighborhood Restore Housing Development Fund Corp. sold multiple buildings to Fordham Bedford Housing Corp.

Four other sales happened to range from $13.8 million to $23.4 million in acquisition costs for each, making sales transactions across the city relatively high.

Market Forecast for the Rest of 2022

In spite of the lull caused by the pandemic, demand for affordable and multifamily housing is high.

General Investor Activity: Where is the most money flowing?

There has been some investment into affordable housing within New York City.

Investors see an opportunity in availing themselves to more affordable building options.

Investors should be able to find affordable investment opportunities with a guaranteed high cash flow and solid return on investment.

Takeaways for Multifamily Investors

There are many places to invest money in New York City multifamily buildings.

The market is very competitive and there is a myriad of investment opportunities, which makes the New York City multifamily market one of the most dynamic in the U.S.

With the push to encourage more new development, investors have a variety of options when looking at investing in New York City multifamily buildings, especially with higher than normal vacancy rates.

The New York City multifamily market fell severely during the COVID-19 pandemic but is on its way to recovery.

While the market recovery may be slow, it will continue to adjust.

In the meantime, investors can take advantage of new plans in development and market trends to identify some excellent NYC multifamily investment opportunities.