After months of record rental price cuts and unprecedented compromises by commercial property owners in New York City, some metrics suggest that a rebound is in order. However, signs of rising demand remain balanced by opposing factors.
Ongoing uncertainty regarding coronavirus and the recent extension of a commercial eviction moratorium through January 2022 certainly concern property owners and investors, including those motivated to sell. However, sustained job growth throughout Q2 2021, economic stabilization measures from the federal government, and rising demand for commercial space are reasons for optimism.
Sellers May Benefit from Increasing Demand, But Much Uncertainty Remains
Per CBRE Group, demand for office space in the 12 largest commercial rental markets increased throughout Q1 and Q2 2021. Though demand in Manhattan still lags behind cities like Boston and Los Angeles, the arrow is trending upward—moderately but steadily.
For commercial real estate owners and investors, heightened demand is much-welcomed. Stakeholders hope that renewed interest will chip away at office vacancy rates not seen in New York City for decades. With steady re-occupation of commercial spaces should come a correlated uptick in rent and closing prices.
With that said, demand growth for commercial space remains modest. Despite greater demand, the volume of office space leased in Manhattan over the past year has declined. It's not yet clear how many employers plan to re-populate office spaces instead of maintaining largely or entirely remote workforces.
With so many unsettled variables in play, anything beyond cautious optimism may prime those on the seller side of commercial real estate for a letdown.
It Is a Buyer's Market, and But Is the Demand There?
With commercial vacancy rates still above historical averages, prospective commercial real estate buyers have ample reason for caution. And yet, commercial lending gained momentum throughout Q1 and Q2 2021.
The CBRE Lending Momentum Index, which tracks the rate of commercial loan closings, gained 10.8% from Q1 2021 to Q2 2021. Though the demographic of lenders shifted a bit during this period, the net result was more capital in commercial real estate markets.
Despite uncertainty about occupancy and the future of work, it's clear that buyers remain very much interested in New York's commercial landscape.
Call The Law Offices of Melvin Monachan, PLLC Today for Real Estate Counsel
Whether you are preparing to sell commercial real estate, purchase a commercial space, or fight off foreclosure of a commercial property, our firm is here to assist you.
Call The Law Offices of Melvin Monachan, PLLC, at (347) 389-1682 or contact us online. We provide legal services tailored to your specific needs.