On March 13, 2020, President Trump announced a National Emergency due to COVID-19. On March 28, 2020 Governor Cuomo halted all nonessential construction sites in NYS. On the business front, retail establishments were closing, offices were closing their doors with non-essential workers ordered to stay home. It was a time of great uncertainty and tragedies.
New York City. With all this around us, developers in NYC showed their resiliency...and the numbers prove this fact. According to CoStar®, In 2019 there were 297 development site transactions with a dollar volume of $6 Billion and an average sales price of $20m (a record for avg development sales price). In 2020 the dollar volume number tanked 62% to $2.3 Billion, but the transaction volume fell by only 23% with 228 transactions and an average sales price of $10.2m. With all the surrounding chaos, you would think that number would be far less.
In 2021, from January until September, we have seen 101 development site transactions for a total of $1.1 Billion and an average sales price of $11.2m. There is a lot of uncertainty with the national and local political landscape, the looming 421a tax exemption and the ongoing Covid-19 crisis, which is why we are seeing numbers as low as in the year 2010.
What does the existing construction landscape look like?
The first quarter of 2021, understandably, did not see as much development as Q1 2020: 124 NB permits were filed for commercial properties between January and April 2021, compared to 218 permits filed in the same period of the previous year. Resultingly, Q1 2021 saw approximately 4.6 million SF of Zoning Floor Area (ZFA), whereas permits filed in Q1 2020 accounted for 11.4 million SF of ZFA.
However, it seems that new development numbers are rebounding after a tumultuous 18 months of uncertainty. The first three quarters of 2020 saw a total of 660 NB permits filed, according to DOB data. In 2021, by comparison, we have seen 712 NB permits filed between January 1 and September 30.
Currently, there are 1,863 New Building permits in New York City across all asset classes pulled: 159 in Manhattan, 220 in The Bronx, 301 in Staten Island, 559 in Queens and 624 in Brooklyn. There are also 403 Demolition permits presently pulled.
Questions that will start to be answered in 2022…
With a new mayor and governor leading New York, will they work together? If so, what direction will they lead the city in? How will they solve for not only the affordable housing crisis in NYC, but also, the workforce or mid-market housing that fuels our city? Will they give tax exemptions to developers for building affordable housing? If so, how will that look? Can they put together smart neighborhood rezoning, and make the zoning code less archaic? How will they tackle the crime and homelessness challenges our city is facing?
What direction does the city council take us in? Will it be the current, “anti-Amazon”, “NIMBY” philosophy we have seen in the last 24 months? Or do they see how jobs and deregulation will fuel this economy.
How does the DOB work with developers and other government organizations to streamline the approval and permitting process, to get much needed housing, retail, schools, etc. to the public with speed, safety, and ease?
Can we be a developer friendly city? Or will we lose our developers to more business-friendly cities? Can we entice developers across the nation and world to want to start developing in this great city again?
We look forward to these answers, and where needed, we are eager to help the powers-that-be answer these questions.
We hope you enjoy this Fall 2021 Development Whitepaper and hear from some of our experts on the ground.