Though Manhattan isn’t the only real estate market to be impacted by the coronavirus pandemic, it’s certainly taken a substantial hit. In June and July of 2020, over 120,000 apartments were available for lease, representing roughly a 26% increase over the same two month-period in 2019. Furthermore, the median rental price in New York City was $3,167 in July, which was a 10% decline from July 2019.
It’s not just residential Manhattan real estate that’s been sluggish. Office buildings are sitting vacant, too, and the fear is that tenants won’t re-sign leases once their current agreements come to an end. Throw in the fact that retail chains are rapidly leaving Manhattan, and it makes for a pretty dire situation.
Still, this isn’t the first time New York City has taken a hit, and in the past, Manhattan has done a beautiful job of recovering. Just ask one of the most famous real estate developers who’s truly seen it all.
One big name in real estate still believes in New York City
Months before the September 11 attacks, famed real estate developer Larry Silverstein signed a 99-year lease on the World Trade Center complex. Following that tragedy, the fear was that businesses and residents alike would abandon New York City and that Lower Manhattan would struggle to be rebuilt. Fast forward to pre-pandemic times, and it’s clear that Manhattan continued to thrive despite the horrific events of 2001.
Of course, New York City is facing a new set of challenges now. But Larry Silverstein has faith in its ability to recover. In a recent interview with National Real Estate Investor, Silverstein insists that Manhattan is still a desirable place to live and conduct business. It’s a major financial and entertainment hub, it’s home to some of the country’s leading sports teams, and its array of restaurants alone is enough to entice tourists. As such, even if the situation remains bleak in the near term, once the coronavirus pandemic ends and life is able to get back to normal, Silverstein believes that Manhattan will quickly bounce back — perhaps not overnight, but in time.
Let’s also not forget that once the pandemic wraps up, the economy should recover fairly quickly, at least in theory. After all, it was going quite strong right up until the virus hit U.S. soil. Once the recession ends, the lure of New York City will once again take hold. Residents will be more willing to pay a premium for rent once they don’t have to worry about losing their jobs. Commercial tenants will be eager to sign leases once it’s safe to bring a full-fledged staff into the office. And as soon as theaters reopen and air travel becomes more viable, we can bet on Manhattan tourism ramping up as it usually does.
Therefore, while the city may be struggling now, this isn’t the first battle it’s had to fight, and just as it rose through the ashes of 9/11, so too does Manhattan have the capacity to survive the coronavirus pandemic. Real estate investors and commercial and residential landlords may need to sit tight for a number of months, or even a couple of years, until that happens, but a vote of confidence from Larry Silverstein should really inspire them to not give up hope.