Among the more than 16,200 condo units in new buildings completed in New York City since 2013, one in four remain unsold, or roughly 4,100 apartments – most of them in luxury buildings, according to a new analysis by the listing website StreetEasy.
“I think we’re being really conservative,” Grant Long, the website’s senior economist, tells the New York Times. He notes that the study looked specifically at ground-up new construction that has begun to close contracts. Sales in buildings converted to condos, a relatively small segment, were not counted. And there are thousands more units in under-construction buildings that have not begun closings but suffer from the same market dynamics. Namely: too many apartments and too few buyers.
Weirdly, projects have not stalled as they did in the post-recession market of 2008, and new buildings keep punching into the sky. But there are signs that some developers are beginning to wake up and smell the coffee. The prices at several new towers have been reduced, either directly or through concessions such as waived common charges and transfer taxes, and some may soon be forced to cut deeper. Tactics from past cycles could also be making a comeback: bulk sales of unsold units to investors, condominiums converting to rentals en masse, and multimillion-dollar “rent-to-own” options for sprawling apartments.
Conversely, economic realities have forced an “own-to-rent” strategy on some unfortunate new unit-owners. A growing share of condos sold in recent years have been quietly re-listed as rentals by investors who bought them and are reluctant to put them back on the saturated market. Of the 12,133 new condos sold between January 2013 and August 2019, a stunning 38 percent have appeared on StreetEasy as rentals.
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.