Pandemic eats into Manhattan property market

Patrick W. Smith, associate real estate broker with the Corcoran Group, said the ban dealt the market a huge blow.

"I cover Long Island City, Manhattan and Brooklyn. During the shutdown, with in-person showings not permitted, new contract signings declined by approximately 90 percent compared with the same period last year. It was a very large drop," he said.

Rebound anticipated

Manhattan isn't the only area where residential sales have plummeted. A report by the Real Estate Board of New York, or REBNY, a trade association, showed that from Jan 1 to March 31 year-on-year residential sales in all five boroughs of New York City fell from $10.5 billion to $8.7 billion.

The number of residential sales transactions in the boroughs－including condominiums, cooperatives and family houses－dropped from 10,382 last year to 8,702 this year, the lowest figure recorded since the fourth quarter of 2011.

James Whelan, REBNY's president said: "Market indicators warned New Yorkers that the housing market was entering a downturn even before the coronavirus pandemic caused an unprecedented public health and economic crisis in New York City."

However, Smith and other real estate brokers said that despite the problems caused by the pandemic, the property market could rebound in the third quarter as New York gradually reopens. The city entered the third phase of reopening on July 6.

"Recently the state said we could do in-person showings, with certain restrictions. As soon as that happened, we saw an immediate increase in signed contracts, showings and offers," he said.

Smith added that there had been some pent-up demand and suggested that activity could increase in the third quarter.

Although there is optimism about a market recovery, there is no guarantee that the thousands of residents who fled to the Hamptons, upstate New York, Connecticut and elsewhere to escape the virus will return.

An estimated 60,000 New Yorkers who have left the city has resulted in vacancies for Manhattan apartments rising to the highest level in 14 years.

In June, the number of new lease signings was the lowest for nearly 10 years, according to the Elliman report, with the vacancy rate standing at 3.67 percent, compared with 1.61 percent in the same month last year.

Median rental prices in Manhattan fell by 4.8 percent from June last year to $3,378 a month, erasing rises seen in recent years, the report said.

With the city's residential market struggling, its commercial property sector could be drastically affected by people working from home, especially if the traditional office is viewed as "unhealthy", despite design changes.

Some researchers and company executives think people will continue to go to an office for work, but increasing numbers may operate from home two or three days a week.

As a result, questions are being asked about the merits of continuing to pay high rents for Manhattan office space.

Several leading employers have decided to allow employees to work from home, including the research company Nielsen. Its 3,000 workers in the city no longer need to be in the office full-time and can operate from home for most of the week.