With retrospectives on the twenty-teens across industries, segments of culture, and more, the New York Times published a piece on the rise and wobble of the luxury condo in Manhattan during the 2010s. The piece pairs well with recent analysis courtesy of Bloomberg news that examined the severity of the supply glut in luxury condos. It should be noted at the outset that while NYC’s physical landscape was most visibly changed in the past decade by the construction of super-tall residential skyscrapers which house many of the aforementioned luxury condos, the impact of the luxury condo on the city’s real estate has rippled far beyond Manhattan alone. Housing markets across the city have been shaped by the major increase in this particular type of residential unit. [1]
Between 2009 and 2019, more than 54,000 new condo units were built, with nearly 80 percent of these constructed in Manhattan and Brooklyn. As of this January, a full 7000 of Manhattan’s 23,000 new condo units remain unsold, although the overwhelming majority (6000) of the unsold units remain formally unlisted and are considered part of the “shadow market” as developers hold the units off listings to avoid a further deterioration in prices. Referencing this same data, Bloomberg’s analysis of 2019 sales indicates that it could take the market as long as six years to clear the remaining stock of condos built since 2015 if the pace of sales matches the one that prevailed during 2019. [2]
That said, a strong glimmer of hope for selling off this stock of housing comes in the form of Silicon Valley. As we have discussed regularly, Big Tech continues to expand its workforce in NYC, and with the median salary at companies like Facebook and Google just over the $250,000 mark, the influx of well-compensated employees represents a potential customer base for the luxury housing that is currently selling at a sluggish pace (the average salary in the tech sector overall is $153,000). Over the same decade we have been discussing (09-19) the number of tech jobs in the city increased by over 80 percent, from 79,000 to nearly 143,000. Between 2020 and 2022, Big Tech plans on adding tens of thousands of more jobs in NYC, suggesting that new buyers will be forthcoming for the current glut of pricey apartments in Manhattan and elsewhere. [3]
[1] Chen, S. (January 2020) The Decade Dominated by the Ultraluxury Condo from NY Times https://www.nytimes.com/2020/01/10/realestate/new-york-decade-real-estate.html Accessed January 13 2020
[2] Carmiel, O. (January 2020) Manhattan’s Flood of New Condos Could Take Six Years to Sell from Bloomberg https://www.bloomberg.com/news/articles/2020-01-06/manhattan-s-flood-of-new-condos-could-take-six-years-to-sell Accessed January 13 2020
[3] Haag, M. (January 2020) Silicon Valley’s Newest Rival: The Banks of the Hudson from NY Times https://www.nytimes.com/2020/01/05/nyregion/nyc-tech-facebook-amazon-google.html Accessed January 13 2020