Reopening New York City, along with its boroughs like Manhattan, is like rotating a color wheel. An even more massive upsurge in coronavirus cases will further wreck the economy and keep the city closed throughout the near future. The real estate sector is waiting for a breath of fresh air to see how office leasing, investment sales, condo leasing, and development will occur in the aftermath of the outbreak and the lockdown.
The probable middle-of-the-road outcome is likely a recession in the realty market in the area. While some companies are already thinking about expansions, asking rents for commercial real estate for lease Manhattan will drop, and it’s hard to tell how much. The retail perspective is much more ambiguous. In the twelve main shopping corridors of Manhattan, retail rent had plummeted before New York was struck by the coronavirus and will likely continue to decline because stores are struggling to reopen and retain clients this year.
Some analysts claim that the outbreak may shut 20 percent of small businesses. The Federal reserve bank of New York discovered that even before the coronavirus engulfed the U.S., only one in five financially stable SMEs will live with a two-month sales deficit and continue operations.
As to how long COVID-19 would affect local real estate practitioners, 58% expect the pandemic to run its course this year, while nearly one in five predicts it will impact their business practices by 2021. A tiny fraction predicts that the global health crisis will continue to have a direct impact on their business by 2022.
Looking far beyond health emergency, local real estate agents believe that the market climate and consumer behavior will be the two biggest influencers on and beyond the 2020 real estate industry. In reality, 71% of residential experts and 64% of commercial consultants identified the economic environment as a crucial part of the sector’s performance. It was accompanied by customer behavior at 58% and 57%, respectively.
While state solutions are being tackled and property owners are negotiating with lenders, the investment market is expected to remain frozen over the next few months. Sales for commercial buildings will find it difficult, retail may underwrite less than half its value, and business owners looking to lease commercial space in NYC may decline.
New York can continue to pursue the example of other cities to encourage residential and industrial residents to compensate for missed rent for many months without fear of eviction. The state recently extended the Marcheviction moratorium by 20 June to all tenants and by 20 August to renters eligible for unemployment benefits or suffering financial hardship as a result of COVID-19. However, most tenants may need more time to pay back rent missed during the months when they can’t work.
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