And Real Estate Will Adapt
Expedited Changes In our interactions with technology, space, and consumption a lot of us are making lifestyle changes that have quickly accelerated in the last month. That has happened in the growth of The Food Delivery Economy with the likes of Amazon, Instacart, and FreshDirect struggling to keep up with the demand for grocery delivery services. Between now and 2023 the spending in that category is expected to rise from $51.4bn to $117bn. Similarly 'meal kit' growth has exploded for those who want to cook at home with pre-measured ingredients and easy-to-make recipes. This points to a continued uptick in demand for last-mile industrial space to help facilitate the affordable preparation, storage, and delivery of these goods to city residents. - On the future of the office market the growth of virtual work in tandem with social distancing measures has created mixed opinions. On one side as people work from home it's expected that the demand for formal office space will subside. But with new safety protocols and the need to distance there could be the opposite effect in which more space is required. On office needs Morgan Stanley CEO James Gorman commented, “We’ve proven we can operate with effectively no footprint" so he feels a reduction in leased space is possible. While there's unquestionable benefits of having workers under the same roof to collaborate and uphold accountability I expect working-from-home to become a major component of maintaining low density in the office while granting more employees the flexibility they've long craved. - Coworking operators will take a hit along with the Landlords whose portfolios include a high mix of the office-share market. Their models often have flexible lease commitments where many subtenants are already dropping subscriptions and the expectations of having more space per person will reduce the path to profitability. We've seen this already with WeWork requesting upwards of 30% reductions in rent from their Landlords. - A bright patch for residential real estate is that some processes are catching up to the 21st century. Cuomo permitting virtual document notarization through tools like Zoom went a long way toward moving the closing process online. Appraisers and inspectors are deemed essential under Cuomo’s PAUSE order so those reviews of spaces are still possible assuming one person on the premises at a time. - Agents are trying to keep busy as virtual tours and "Zoom Open Houses" surge - the types of services I had in my business from Day 1 when I first became licensed in 2013. While the wide adoption of these tools is to be applauded I do not advise purchasing a home - especially a resale - without physically touring. These technologies are not nearly developed enough to make an informed decision in a market like New York City where intangibles like natural light and views carry so much value. While I assume that's obvious it was disheartening to read an agent's touting of this "new technology" as if it can empower a buyer to purchase an apartment without leaving one's bed - I will always advise clients to physically tour spaces prior to submitting an offer.
Manhattan's residential market has been characterized by an 89% decline in new listings year-over-year. Forecasts point to a thinly traded market over the next several months while in-person real estate showings are on hold at least through May 15 (Urban Digs). Those listings which have gone under contract in recent weeks have experienced more negotiability than normal.
Transportation options will expand in New York State as e-bikes and e-scooters have been legalized. While it will be up to local legislators to determine whether or not to have these options in their districts I view this as a positive alternative for commuters who want to remain socially distanced. In case you missed my email a few weeks ago here's a link to commonly asked questions right now: Do I have to pay my mortgage? Is my rent frozen? What if my lease is expiring on April 30 do I have to move? Please check out the Q+A with Attorney Andrew Luftig as we all navigate this challenging time. For any questions please feel free to reach out to me via call or text at 646.939.7375.
Stay safe, my friends.
The Roebling Group