NYC Real Estate -- 6 Things to Watch in 2022

1.?Good Cause Eviction?

If this is not on your radar, it should be. Tenant activists are pushing to get legislations passed in smaller upstate cities (Albany, Newburgh, Hudson, Poughkeepsie, Ithaca) with the goal of gaining enough momentum for statewide legislation. ?The bill would ultimately prohibit a landlord from evicting a tenant or denying lease renewal without ‘good cause’. Details will matter, but investors are starting to price-in this legislation, especially for value-add deals if the current rent is well below market rate.

2. Price Premium for Vacant Buildings

Buyers are starving for yield. ?The potential for Good Cause Eviction passing combined with a city that is already very tenant favorable should make vacant buildings even more desirable—will be interesting to see the premium buyers allocate.

3. Expiring 421A Tax Abatement

The current tax abatement is set to expire in June 2022. There is a huge amount of uncertainty around what the state legislature will do. According to the Commercial Observer, the last time 421A was set to expire (January 2016) developers had 7,781 permits approved for 299 projects the month before. Expect to see the same trend in 2022 and a significant drop in land transactions.

4.?Gowanus Rezoning

The largest rezoning in the de Blasio era recently passed that is expected to result in 18,000 new residents, 8,200 new apartments, 696,000 SF of new commercial space by 2035. Since the rezoning passed and spurred on by the expiring 421A Tax Abatement, we have seen permits filed for 14 new buildings, totaling over 3,000,000 square feet of space and more than 3,500 new apartment units!

5.?Interest Rates / Inflation

Consumer prices jumped 6.8% in November, the fastest inflation spike since 1982. Views remain mixed on whether higher inflation is here to stay – if so, real estate historically has been a good hedge; however, if rates rise, we could see cap rate expansion.

6.?NYC Dollar Volume in Sales?

According to B6 NYC should end the year with about $17.01B of sales, which is down 15% from 2020 and 41% from 2019. This metric is a good indicator of institutional confidence in the city and the industry will be looking for a major increase in dollar volume sales in 2022.?

Happy New Year and feel free to reach out to discuss further!

Bobby Lawrence | Director

[email protected] | (646) 933-2648