New York City, with its bustling streets and central role in US economics, provided an eye into the breadth of the COVID-19 pandemic over the course of the past year. With drops in tourism (the hospitality industry previously generated $44 billion in annual spending), high unemployment rates, and an early peaking of cases, the devastating losses impacted New York City's commercial real estate market.
At first, families in the wealthiest residential neighborhoods fled, and commercial real estate changes soon followed. As businesses struggled to pay their rent and mortgages amid a shutdown, many businesses had to close their doors. According to a NYT article, “By some estimates, one out of every seven chain stores closed.” Independent stores were hit even harder.
James Whelan, president of the Real Estate Board of New York, said on the Schneps Connects Podcast, “If the city does well, the real estate industry is going to do well. If the city is not doing well, real estate is going to have its issues and vice versa; the two are so intertwined.”
The NY Post reports that at the height of the past year, office towers reached a “near-historic high vacancy rate of 15 percent, and remain 85 percent physically unoccupied.”
And yet, amidst the damaging numbers, there is hope that's come in the past months. The NY Post noted that the Real Estate Board of New York found, “Investment and residential sales of $6 billion in January 2021 saw a 38 percent jump over January 2020.” This increase resulted in $190 million in transfer-tax revenue for the city and state, which is 31 percent more than last January.
Several developers have also released numbers that speak to a turning tide. For example, MetroTech's renewed 132,000 sq. feet since the start of the fourth quarter, and their 5.5 million sq. feet are now 91% leased. SL Green also reported similar findings. They closed 464,000 sq. feet in leases and 1.25 million sq. feet over the past year.
These reports speak to optimism that we are nearing at least the beginning of the end, especially as vaccine rollout continues and summer approaches.
If you're a property owner who hasn't yet turned the corner and are currently worried about loan obligations, call us today at 347-389-1682 or contact us through our website.