As we look to the future, the New York City New Development market continues to evolve. Continuing our Agent Forecast series, we’ve gathered insights from BHS Development Marketing President Steve Kliegerman. From emerging trends to untapped opportunities, this industry expert offers a glimpse into what buyers, sellers, and investors can anticipate in the year ahead. Read on to explore what lies ahead for NYC's dynamic New Development market!
Looking Ahead to 2025
"The City of Yes will pave the way for much-needed housing across New York City by updating the city’s zoning laws. While this spans all kinds of housing, it will specifically spur the new development pipeline given its ability to eliminate or reduce expensive parking mandates and let developers expand FAR and build bigger in exchange for permanently affordable rental housing. BHSDM is working with them to assess opportunities as together, these new initiatives motivate real estate developers to think creatively, assess and reassess existing buildings and potential sites that were previously dismissed as not-viable.
The Midtown South rezoning, when approved in early 2025, will spur more mid-block development (condo and rental) and a significant increase in FAR on certain blocks. People are already looking at these opportunities. These traditionally commercial submarkets will now give rise to ground-up residential and potentially to office-to-residential conversions. The Research & Advisory team at BHSDM expects to be busy assessing projects as land sales and building sales are considered.
Gowanus rezoning comes to life: Many of the buildings planned within the Gowanus rezoning will start leasing in 2025 and expect 6,000 apartments to be completed over the
Office-to-residential projects will move forward and more will be on the horizon, as 467-M paves the way for more rental housing opportunities in line with the City of Yes. BHSDM is working with the team on Two Wall Street and BHSDM Research & Advisory is consulting with a number of others. Robin Schneiderman, managing director, estimates that there are 20 buildings moving ahead with conversion, totaling nearly 10,000 units, and just under 3 percent of these units are slated to be condos. Of the 20 buildings, 15 are rentals and 5 are condo, with more expected to come in 2025.
Tightening Supply of In-Demand Units: Considering 10-year average absorption, there is about three years of Manhattan new development supply. However, the five largest buildings make up 30 percent, or nearly one year's worth of unsold inventory. And, approximately 25 percent of Real Supply remains in buildings where sales launched prior to Dec. 9, 2019. When accounting for these outliers, we expect a tightening of the most desirable unit types and inventory.
Supply seesaw: Supply will be tight where we need it. In Manhattan there is 2.6 years of supply for new development under $2.5 million. There was an overbuild of Manhattan studios, and Manhattan one- and two-bedrooms have the least supply. It's a very different picture for new development over $10 million, where there is 5.7 years of supply. In Brooklyn, there is only 2 years of supply under $2.5 million, and supply is equally thin across studio, one- and two-bedrooms.
Manhattan pipeline wanes: Manhattan pipeline for new condominium inventory currently sits at 3,200 units to be delivered between 2025-2027 – or an average of about 1,070 units per year – lower than the 10-year historical average of 1,713 units per year.
Look out for luxury rentals. These buildings, like The Maybury, will continue to see demand as workers are expected back in the office near full time, new Class A office buildings including Foster + Partners’ 270 Park Avenue aim for completion, and RTO mandates normalize.
Watch out for creative responses to market demands, such as renovated sponsor sales in existing buildings like 155 West 68th Street, where 58 residences have sold this year, meeting a market need for units at accessible price points in well-amenitized and serviced buildings
People want shorter commutes: Developments within easy reach of the office will be in demand as people continue to work from Manhattan more and want to divest from long commutes." - BHS Development Marketing President Steve Kliegerman