New York Multifamily Market Report
A significant number of New York renters are currently competing for a limited amount of units. The vacancy rate is near historic lows and is one of the tightest among U.S. markets. However, it is essential to acknowledge that the absorption numbers have decreased in recent quarters compared to the elevated levels observed throughout 2021 and H1 2022. Over the past 12 months, the supply of housing units has slightly exceeded the demand, as 20,991 units were delivered while only 18,275 units absorbed. As a result, the vacancy rate has slightly increased during this period but remains below the historical average.
- The New York market has reached remarkably low vacancy levels, maintaining its position as one of the tightest multifamily markets in the U.S. with a minimum of 100,000 units available.
- Over the past 12 months, rental prices in all New York submarkets have exceeded their pre-pandemic averages, experiencing a growth rate of 2.3%. This figure is double the national average of 1.1%, indicating the robust performance of the New York rental market.
- In recent quarters, the pace of sales volume has decelerated, despite the presence of market fundamentals that typically support investment activity.
- A significant portion of the construction activity is concentrated in neighborhoods that have consistently witnessed the addition of new housing units over the past five years, including Jersey City, Long Island City, and Brooklyn.
Rents | Vacancy | Construction
With a vacancy rate of 2.5%, New York is experiencing one of its lowest levels on record. Despite being recognized as one of the most expensive markets outside of San Francisco, the city continues to attract renters, evident from the substantial positive absorption levels and significant private sector job growth observed since the beginning of 2021. While there were initial concerns that reduced office usage would negatively impact the multifamily market, it has become evident that the vibrant dining, culture, and arts scene in New York City have emerged as the significant drivers of demand for renters than the physical proximity to office spaces. Over the last 12 months, rents have seen a growth rate of 2.3%. Although there was a belief that rents might have reached their peak due to a downward trend in daily asking rents throughout H2 2022, they have rapidly reversed direction throughout 2023.
Despite challenges, developers in New York continue to be drawn to the market due to its robust fundamentals and appeal to potential renters. Over the last year, approximately 21,000 units have been completed, and there are currently around 66,000 units under construction. This represents 4.3% of the existing inventory, reflecting the ongoing commitment to meeting housing demands in the city.
Rent prices in the New York Metro area continue to rank among the highest in the U.S., reaching an average of $3,060 per unit.
New York, By the Numbers in the Last 12 Months
- Units Under Construction: 66,434
- Units Delivered: 20,991
- Vacancy Rate: 2.5%
- Asking Rent Growth: 2.3%
- Average Price Per Unit: $365,000
- Sales Volume: $9.5B
- Sale Comparables: 1,353
The 12-month sales volume is $9.5 billion; however, sales volume has experienced a slowdown in recent quarters.
Prospective buyers are facing concerns related to several factors, including elevated borrowing costs, a decrease in new loan issuance by lenders, and the possibility of an upcoming recession. These factors are currently influencing the minds of potential buyers and may continue to impact the investment market throughout the remainder of 2023.