Photo: The Living Room at 605 West 42nd Street
A new year has begun and rental predictions for NYC real estate in 2016 are already dynamic seedlings of thought. Although the city is a shapeshifting landscape with equally elusive intangible and concrete trends, it’s still fun to forecast the future.
A new year has begun and rental predictions for NYC real estate in 2016 are already dynamic seedlings of thought. Although the city is a shapeshifting landscape with equally elusive intangible and concrete trends, it’s still fun to forecast the future. We’ve compiled a list of the most intriguing predictions from the top real estate publications. Like everyone else, we look forward to seeing how everything will unfold in the next 11 months, but in the meantime, read on for professional insight and slivers of expectations.
Slower Growth for 2016
StreetEasy forecasts slower growth for both sales and rental markets in NYC. Housings costs are expected to remain high, but renters should be able to breathe a small sigh of relief in result of slower price growth compared to years past. Rental price growth will exceed sales price growth due to considerably low rental rates and cooling of the sales market. StreetEasy reports that “the city’s median rent price is forecasted to rise 3.2 percent to $3,055 – one point higher than the forecasted growth rate for sales prices.” Overall, growth in the sales and rental markets will be slower in 2016. Robert Nelson, President of Nelson Management Group, makes his own prediction that attests to the slower pace: “If you look at some of the reports that have come out recently, rents are not moving as much as they were over the last 12 months. It seems that things are slowing down.”
Turn to High-End Rentals over Luxury Condos
Darren Sukenik, a Douglas Elliman broker, predicts an enormous boost in luxury rentals among “hedge fund guys” who may have had a less than stellar 2015 and would most likely prefer to rent rather than buy.
Sukenik argues, “A lot of these finance guys don’t want to be the one to buy at the top of the market,” he said.
DNAInfo further predicts that one residency that should garner much attention is the Sky at 605 West 42nd Street, by the Moinian Group, which is set to be the city’s largest residential building at 1.2 million sq. ft. According to Mitchell Moinian of the Moinian Group, it boasts a state-of-the-art suite of amenities, “programmed the building to the nines, with everything under the sun: three swimming pools, indoor and outdoor; hair and nail salon, one of the largest health clubs; pilates, yoga, basketball court.” Moinian believes this sparkling overflow of lush amenities will elevate the state of luxury rentals and draw more renters of the high-end strata.
Abundance and Burden of Brooklyn Rent
Thousands of new rentals are expected to flood Brooklyn, notably in Williamsburg and Downtown Brooklyn, and buyers will have to decide to “rent or buy as new rental buildings offer a number of incentives (reduced rents, one or two months free, no application fee, no brokers fee, etc.), which can be very tempting.” Conversely, prospective buyers interested in Brooklyn should be aware of the upcoming hike in rental burden, which will surpass 2015 numbers “due to rent growth far outpacing the city’s income growth.” In a forecasted analysis of rent-to-income ratio by StreetEasy, “the typical New York household is forecast to spend 65.4 percent of its total annual income to afford median rent in 2016, up from 58.7 percent in 2015. Brooklyn will have the highest burden (65.7 percent) — nearly six points higher than last year.” Furthermore, Bronx renters are predicted to have the second highest burden with a “forecast rent-to-income ratio of 52 percent, followed by Manhattan (48.8 percent) and Queens (41.4 percent).”
