MANHATTAN — The year 2015 was all about records: new heights forsales prices, rentals … and thenumber of applications to affordable housing lotteries.
But the market began to shift late in the year: sales price growth cooled, and landlords offered more concessions amid rising vacancies for rentals. Both are trends some brokers predict will continue.
Affordability will also remain a big issue as the de Blasio administration’s controversial zoning rules, intended to spur affordable housing, wind their way through the public approval process.
Here’s what else experts are talking about for 2016:
1. Sellers will no longer have an extreme advantage.
Sellers will need to be more prudent about pricing as many buyers have reached their limit, many brokers said.
“By no means will buyers have critical advantage, but they will have more leverage than in 2015,” said Noah Rosenblatt, founder of UrbanDigs, a site that analyzes the Manhattan market.
2. Ultra-luxury condos will see price cuts.
There may be more condos breaking the $100 million mark, but as inventory of the high-end market — above $20 million — has expanded, its sales will become “sluggish,” said Daniel Hedaya, of Platinum Properties, predicting that new developments with unsold units will start seeing price cuts.
It’s already started at buildings like Zeckendorf Development’s 50 U.N. Plaza and theToll Brothers’ 400 Park Avenue South and 1110 Park Ave. When Zeckendorf dropped prices, sales immediately increased, noted real estate expert Jonathan Miller.
“It’s not as if these prices are far off, it’s just that they’re priced based on the market two or three years ago, without the competition,” he said.
3. One developers’ woes might be another’s opportunity.
High land costs are putting a damper on development, said Robert Dankner, of Prime Manhattan Residential, noting that the “furious pace of buying dirt $700 to $1,000 a foot” has since “grinded to a halt” since developers can’t charge $3,200 a foot.
“There are some signs of people overpaying,” said Roberta Axelrod, of Time Equities. “That may wind up in opportunities later” — for other developers.
4. Developers, in general, become more “cautious.”
With some big regulatory unknowns, like what’s happening with 421-a tax breaks and details of the city’s affordable housing plans still in flux, many developers feel unsettled about starting new projects.
“Over the course of last six months, we’ve become a lot more cautious,” said Matt Baron, of Simon Baron Development, which recently opened Upper East and Upper West Side condos geared toward the “mid-market” — $2 million to $10 million range — and also launched Ollie at select buildings to provide renters with “lifestyle-relevant services” like housekeeping and a social concierge.
Jody Kriss, of East River Partners, which is developing a group of properties in Fort Greene and the Upper West Side, plans to take on smaller projects in 2016, focusing on four to 20 units in Brownstone Brooklyn, noting that smaller projects take roughly 2 years to buy and complete, which is less time than large scale developments.
5. High-end rentals in Manhattan will steal thunder from pricey condos.
The luxury rental market “will go through the roof,” especially as “hedge fund guys” have had a down year and might want to rent rather than buy, predicts Darren Sukenik, a broker with Douglas Elliman.
“A lot of these finance guys don’t want to be the one to buy at the top of the market,” he said.
Mitchell Moinian, of the Moinian Group, believes the building will raise the bar for rentals.
“We’ve 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,” he said.
6. Hello Kingsbridge, Elmhurst and Sheepshead Bay?
As buyers have become more price conscious, expect them to look to neighborhoods like Kingsbridge and Grand Concourse in The Bronx and some “less loved ones in Queens and Brooklyn,” like Elmhurst and Jackson Heights or Sheepshead Bay and Brighton Beach, said Doug Perlson, of online brokerage Real Direct.
“These are places that are commutable,” he said. “They may take longer to get to Midtown, for sure, but they have a lot of new development or tight-knit communities that [buyers] find appealing.”
7. Affordable housing will get more creative.
If the de Blasio administration’s mandatory inclusionary housing and zoning for quality and affordability plans pass, expect an uptick of creative designs for affordable housing, predicts Claire Weisz, founding principal of WXY Architecture + Urban Design.