For decades, New York City has drawn hoards of ambitious young workers, eager to make a name for themselves at one of the many Fortune 500 companies that the city houses. The attraction created a booming real estate market.
But as the COVID-19 outbreak has pushed companies to either consider relocating away from Manhattan or pivoting to remote employees, some industry observers now worry that the lingering effects will kill the residential real estate market in New York City.
Property investor Barry Sternlicht appeared on Bloomberg last week to warn that New York City landlords, desperate to hold onto its tenants, would cut apartment rents by up to 25% if they thought the city’s residents were set to move permanently.
Alarm bells are already beginning to ring: the number of empty Manhattan apartments available for rent in May was the highest since 2006, according to one CNBC report. Manhattan apartment sales also plunged more than 80% in May, another CNBC report said.
Online engagement numbers add to the evidence that interest in New York City real estate is beginning to decline. Zillow ($NASDAQ:Z), Trulia, and StreetEasy all experienced a rising number of Facebook followers over the past six months. Zillow and Trulia, which allow users to search for listings across the country, both had a fairly unchanged number of Facebook followers since March. But StreetEasy, which only lists real-estate options in New York, saw a 0.3% decrease in the number of Facebook followers beginning in mid-March.
Although the slight decline in StreetEasy Facebook followers comes after a 0.7% gain in followers since the beginning of the year, data from other source points toward broader market factors playing a role in the trend.
Real-estate demand is beginning to rebound across the rest of the country, but data from Zillow suggests New York City is one of the outliers. New York City homes sat on the market for 77 days before getting snapped up in mid-June, which was far longer than the country-wide average of 22 days.
Facebook mentions of StreetEasy have also flattened since the end of March, adding to the evidence that interest in New York City real estate is beginning to die down.
Not all the evidence points toward a city-wide exodus. Last month, the New York Times reported that apartment rents had yet to come down, as landlords remain confident that the city’s residents will return once the pandemic dies down.
But as some experts forecast at least a quarter of US employees working from home by the end of 2021, a transition to remote work could help city residents decide to flee to cheaper territory — and tip one of the country’s most expensive real-estate markets on a slide downward. So if you were ever eyeing moving into Manhattan, you might get the chance soon enough.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.