Confidence among New York real estate brokers dipped in the third quarter thanks to political disarray in Washington and a relentless push toward super-luxury residential development that has dimmed the prospect of middle-class housing creation.
The Real Estate Board of New York‘s Real Estate Broker Confidence Index found that overall broker confidence fell to 8.75 percent in the third quarter from 8.89 in the second quarter. “New York City remains one of the most prosperous and dynamic real estate markets in the world,” Steven Spinola, the president of REBNY, said in a prepared statement. “We’re seeing strong and steady demand for both residential and commercial properties, while financing for deals continues to improve from the downturn. That being said, there are political headwinds like another government standstill that could disrupt market confidence especially if it triggers a sudden and rapid rise in short-term interest rates.”
Seemingly perpetual gridlock on Capitol Hill was not the only drag on New York brokers’ spirits. The report said that residential brokers were increasingly concerned about the homegrown bonanza of “ultra high-end” dwellings like those at Extell Development‘s One57 and 225 West 57th Street, Vornado Realty‘s 220 Central Park South and Macklowe/CIM Group‘s 432 Park squeezing out the creation of inventory for middle-class renters and buyers. Those towers–all of them near the southern border of Central Park–have also recently caused a groundswell of protest from preservationists worried about their shadows marring Manhattan’s backyard.
The Residential Overall Confidence Index fell to 8.33 from 8.71 in the previous quarter. Brokers also tempered expectations for their six-month outlook. The government’s financing runs out once again in January.
On the other hand, the industry was rosy about the financing and commercial real estate leasing markets. The REBNY survey’s Overall Present Situation Index for the commercial sector rose to 9.77 in the third quarter from 9.28 in the second.
“The NYC investment sales market is at unprecedented levels,” James Nelson, a partner at Massey Knakal Realty Services, said in a prepared statement. “The average price per square foot in Manhattan is approaching $1,000, which is 50 percent higher than 2010 levels. We believe this is a direct correlation to the lack of supply that is not meeting global demand.”
In another optimistic message, residential brokers in the survey remained hopeful that projects stalled during the recession would resume, easing inventory concerns.
Representatives from REBNY could not immediately be reached for further comment.