After a year of setbacks in the New York real estate market, broker confidence surprisingly shot up toward the end of 2019 thanks to promising leasing activity from the tech sector.
Brokers on both the commercial and the residential sides of the business reported confidence increasing 13 percent in the fourth quarter from a year earlier, according to the Real Estate Board of New York’s quarterly Broker Confidence Index report.
Brokers gave a confident index score in the fourth quarter of 6.87 out of 10. That was an increase of 18 percent from the third quarter of 2019 and the first positive movement since the start of 2019, a year when rent law reforms shook up the residential real estate industry and while rents softened along several major retail corridors.
Commercial brokers had a more positive outlook than their colleagues on the residential side, with their confidence index rising 22 percent from the previous quarter to a score of 7.28.
“The boost in broker confidence appears to be derived from sustained economic growth and historically low interest rates,” the report read. “Although, there are looming concerns over dramatic policy changes and the upcoming presidential election.”
The positive results were in part driven by a spurt of leasing activity from tech firms and online-native businesses taking brick-and-mortar space, one broker who participated in the study said.
But some looming issues are causing trepidation among brokers, the study found. Uncertainty about the future of real estate legislation from city, state, and federal levels is stagnating commercial leasing and sales activity, while a softening of retail rent prices is giving tenants more options.
Commercial brokers are closely watching for movement on potential commercial rent control legislation, which is giving rise to concerns of a decline in sales of commercial properties with retail space.
Residential brokers noted confidence rising 13 percent from the third quarter to a score of 6.46.
A surplus of inventory and a proposed Pied-A-Terre tax by New York City council is shaking confidence, REBNY said.
The REBNY study, which is issued quarterly, involves an eight-question survey to measure member sentiment on the market and their six-month forecasts. An index below 5 signals that brokers are not confident on the market; a score over five signals that they are confident.