- New York City’s overall property values are projected to grow 5.7%, reaching $1.6T, with residential seeing the highest growth at 7.3%.
- Brooklyn is expected to lead the way with a 9.4% growth in market value, including a 15% surge in rental apartment values.
- Commercial property values are also set to rise, particularly in the office and hotel sectors, with a projected 3.8% increase.
New York City’s real estate market continues to show signs of recovery, with residential apartment values set to rise 7.3% in the next fiscal year, according to Bloomberg.
High demand and a limited supply of available homes are behind the rebound, particularly in Brooklyn, which is expected to lead the way. This follows a period of stagnation due to the Fed’s aggressive rate hikes.
Residential Rebound
The Big Apple’s real estate market is poised for a strong rebound, with total property values projected to rise 5.7% to $1.6T in fiscal year 2025, according to the city’s Department of Finance. This is a big improvement from last year, when values inched up 0.7%, due to the Fed’s interest rate hikes.
Residential real estate, particularly coops, condos, and rental apartment buildings, will see the largest gains, with values expected to rise by 7.3%. The surge is attributed to a housing shortage and high demand for rental properties, driven by a post-pandemic inventory crunch.
The median rent for a one-bedroom apartment in NYC skyrocketed by 21% from February 2020 to September 2024, according to the city comptroller’s office.
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Brooklyn on Top
Brooklyn apartments are projected to appreciate the most, with market values rising 9.4%. Apartment values in the borough are expected to shoot up 15%, buoyed by rising demand for rentals and single-family homes.
“The residential real estate market has grown, with an increase in single-family home sales and values, while rental property values continue to reflect growth in market-rate rents,” noted Preston Niblack, Commissioner of the Department of Finance.
Signs of Recovery
After a challenging period marked by high vacancy rates and remote work, NYC’s commercial property sector is recovering. The total market value of CRE is expected to go up 3.8%, reaching $339.5B.
The office sector, in particular, is making a comeback, with trophy office buildings leading the way, as more workers return to the office.
While office vacancies are still high, at around 23.4%, they are improving from mid-year levels of 24.3%. The higher demand for prime office space, especially in Manhattan, is helping stabilize the commercial property market.
Retail, Hotel Recovery
Alongside the recovery in office space, the retail and hotel sectors are also seeing positive growth. Market values for retail buildings are expected to rise 2.5%, while hotels are forecast to see 5.9% growth. The return of tourism and an uptick in consumer spending contributed to these improvements.
In Summary
As NYC recovers from the pandemic’s economic impacts, its real estate market is rebounding. Residential values, particularly in Brooklyn, are set to lead the way, while commercial properties across the city also show signs of recovery.
However, high office vacancy rates and interest rates will likely keep market conditions mixed in the months ahead. Nonetheless, the city’s property values are expected to continue their upward trajectory as the year continues.
