Top 10 Events for NYC CRE in 2024
As 2024 draws to a close, it’s a good time to reflect on how eventful the year was for NYC commercial real estate. Coming off the heels of incredibly challenging years for investment sales, the NYC market finally began to see some positive momentum.
From my perspective, here are the top ten events and stats that have defined the year:
1) Fed rate cuts – after much anticipation, the Fed finally cut its benchmark interest rate by .50% in September and then another .25% in November to a range of 4.50% - 4.75%. Even with the overnight borrowing rate drop, the 10-year Treasury has remained around 4.2%, keeping mortgage rates elevated.
2) New York Housing Package passes – in April , New York Governor Kathy Hochul passed a sweeping housing package that included 485-x, a new tax abatement for ground up development; 467-m, a tax abatement for office to residential rental conversions; and the removal of the 12x FAR cap. As a trade-off, Good Cause Eviction, which sets limits for increases on most apartment rents in buildings built before 2009, was enacted.
3) City of Yes – In early December, the New York City Council is expected to vote into effect the most sweeping zoning changes for NYC since the 1960s. The plan could produce 80,000 new affordable housing units. Provisions include the ability to convert more office to residential, as well as FAR bonuses for affordable housing.
4) 1.4% vacancy rate – NYC apartments reached a low for vacancy rates since 1968 when NYC began its housing survey.
5) Luxury Retailers buy up Fifth Avenue – In a vote of confidence for NYC, Gucci paid $963 million for 717-17 Fifth Avenue. This adds to Prada’s purchase of 720 and 724 Fifth Avenue for $835 million the year before.
6) NYC Investment Sales are on pace for $15.48 billion in sales, an increase of 60% year-over-year.
7) Manhattan’s office busyness index (return to office/office utilization) reached 75.6%, well above the US average of 62.2%.
8) Manhattan’s office availability rate dropped to 18.7%, the lowest percentage since 2020.
9) NYC retail has the lowest vacancy rate at 14.7% since JLL began tracking in 2016.
10) NYC office sells at steep discounts to peak pricing at discounts up to 70%. Examples include Yellowstone buying 1740 Broadway for $185 million, down from the $600 million that Blackstone paid a decade ago.
Though some events aren’t quite positive, I am most encouraged by the pickup in sales volume as we head into 2025. This year was also a great year for development with the new development incentives and favorable zoning changes. With more certainty in the market, I am hopeful this trend will continue with more buyers and sellers getting off the sidelines and transacting in 2025.