Following news earlier this year of a slowdown in the luxury market due to a glut of inventory, some real estate analysts are wondering about the same in the market-rate rentals market. Over the next three years, more than 38,000 new market-rate rentals will be completed in the city, the Wall Street Journal reports, and this may lead to a reduction or flattening of rents, some real estate analysts speculate.
The WSJ’s reporting is based off of a new study conducted by online real estate company, Ten-X. That firm estimates that most of this new development will take place in Brooklyn and Queens with about 14,686 apartments to be completed this year, and 17,044 apartments to be completed in 2017 (throughout the city). The firm also estimates that vacancies for market-rate apartments will be more than 10 percent in 2017, and that there will be zero rent growth for those apartments in 2019.
Not all of the analysts WSJ spoke with agreed with this analysis however. Some argued that with the expiration of the 421-a tax break program, the frenetic speed with which these projects were previously announced, will reduce. This in turn will balance off supply with demand.
Others still pointed to the increasing population of the city and how the growth of the city’s universities and start-ups were attracting more residents year after year. One analyst pointed to how the competition would change at the upper tiers of the rental market. He pointed to the fact that similar buildings in the same neighborhood have been charging the similar rents up till now, but in the future that will be much more determined by amenities like washers and dryers in unit, and closeness to the subway.
- New York City’s Market-Rate Rental Inventory Set to Swell [WSJ]
- Tenants and Landlords Face Off As Rents Continue to Rise in NYC [Curbed]