NYC Commercial Real Estate Brokers Say They've Never Been More Confident

Even in light of the slew of existential threats facing the industry, commercial brokers’ confidence is on the rise.

The Real Estate Board of New York’s quarterly real estate broker confidence report showed its Current Conditions Index for commercial brokers spiked to hit a record high of 36, up from 20 the quarter before and above the previous peak of 32 from Q4 2019. For residential brokers, the index hit 56, a slight decline from the quarter before.

“While the third quarter saw the real estate industry help lead the city forward on its path to economic recovery, this report highlights the work that still needs to be done,” REBNY President James Whelan said in a statement. “It’s imperative that the incoming City administration and the private sector continue to work together on issues critical to the City’s economic success such as improving public safety, creating good jobs, producing much-needed housing and safely welcoming back tourists.”

Anxieties remain across the industry, however, specifically about the ongoing impact of the coronavirus and how the new city administration will treat real estate issues. The expectations index for brokers in both the residential and commercial industries declined in the third quarter. Commercial brokers’ index went from 52 down to 37, while residential brokers’ EXI dropped to 45 from 55, per the survey.

Certainly, there are some signs of things turning a corner in the real estate industry — though complex challenges remain. Office leasing has improved significantly, though vast amounts of space hitting the market are keeping availability rates high. Still, nearly 60% of tenants said they are now in the market for office leases at least five years long, according to a survey of 400 accounting and financial professionals and commercial real estate executives run by lease optimization software firm Visual Lease that was released this week. 

While many tenants say their 2022 real estate plans won't be permanent decisions, some 75% of landlords said they expect rents to return to or exceed pre-pandemic levels next year, and 61% of tenants also anticipate a return to pre-pandemic office rents.

The residential market in New York also appears to be improving. Landlords have been offering fewer deals in order to secure leases, and home sales are going up. In fact, there were more than 40 contracts signed on apartments $4M or above for the fifth week in a row, per Olshan Realty data.