Post-Pandemic: A Wave of Change in the World of Real Estate Development
New York City since early this year has been undergoing and adjusting to changes and fluctuations caused by the aftermath of the pandemic and inflation. Interestingly, both sale and rental prices now exceed 2019 levels. More domestic buyers, rather than international buyers, have been buying out luxury condos in Manhattan. With change in the real estate scene, the developers are finding that new adjustments must be made to cut costs and meet the new rental and sale demands post-COVID. Despite the increased need for work-from-home settings by renters, the average apartment sizes are getting smaller. Developers’ interests have shifted to the less expensive and crowded areas in boroughs outside of Manhattan, especially in Brooklyn and Queens with an expected number of 56,000 plus rental units to be ready for move-in between 2022 and 2025. Developers are acting quickly on a timeline to qualify for the renewed version of the 421a which expired in June 2022. The 421a is “a property tax exemption if your property value changed because you did construction on a multi-family residential building.” Benefits from the 421a property tax exemption depends on the location and use of the property, and whether or not it meets requirements for affordable housing.
Post-pandemic, the rental attraction factor is no longer on the size of the apartment but amenities such as outdoor space, wellness areas, and even a live-in physical trainer with his/her apartment in the same building. For condos, sales and prices have both rebounded from COVID times and has seen a significant increase from last year and before the pandemic. For developments that began construction during the pandemic, developers changed their plan, reduced the number of units and expanded space for residents overall to encourage attractiveness. However, sales and resales of condos are expected to fluctuate due to inflation. On the other hand, the market expects rental income to increase and/or stabilize with continued high demand.
Stefanos Chen, In New York City, the Demand for New Developments Is Bouncing Back, The New York Times, https://www.nytimes.com/2022/09/18/realestate/nyc-development-rentals-condos-covid.html (Sept. 18, 2022).
Tags: 421a Property Tax Exemption, Affordable Housing, Amenities Increase, Condo, Development, Luxury Apartments, Rental Unit Size, Resales, sales