With so much talk about the lack of sales and rental inventory in Manhattan real estate across all price points, there is a much bigger question being overlooked: namely, how will the city deal with an extra million residents expected to make their home here by the year 2025? When New York celebrates its 400th birthday only twelve years from now, the population of the city (now at a record 8.2 million) is expected to reach an astonishing 9.4 million. Driven mostly by international influx, the city’s booming growth is a phenomenon faced by few other cities throughout the country, and presents a host of challenges to infrastructure, transportation, energy, education and especially to real estate.
Experts have cited a sharp uptick in residential and commercial construction recently, with even more activity looming on the horizon. According to The Real Deal, builders filed plans for more than 12 million square feet of new space in 2012–a 55% increase from the previous year. The number of residential building permits approved for Manhattan coupled with US Census data suggests that we are beginning to build aggressively again, but will it be enough and how soon will the demand be addressed? Of new construction applications submitted to the Department of Buildings in 2012, the majority were for residential developments; of these, the majority were for rental projects. The World Trade Center and Hudson Yards are further indicators that more housing will be available sometime in the near future, but demographers studying rezoning and possible development sites are also concerned that lack of inventory may be with us for years to come.
By the time One57 likely sells out later this year, becoming one of the tallest buildings in the city at 1004 feet tall, and with 18 Gramercy Park’s offerings being quickly snatched up (their $42 million dollar penthouse is now in contract), the luxury market will still face an uphill battle to sate the return of buyers. Even with litigation, the crane collapse from Hurricane Sandy and the logistical near-impossibility of building anything in bustling midtown, One57 reflects the intense, sudden shift to a sellers’ market caused by so few options available. This is equally true at 150 Charles in the West Village, beleaguered by neighbor protests, storm damage, start-and-stop construction and other hindrances. The 91 condo units will be priced competitively and will go quickly. While it is generally easier for developers to obtain loans as compared to individual buyers applying for mortgages, building anything anywhere in Manhattan is a process typically fraught with delays. This only serves to fuel the expense and limitations faced by developers.
On the other end of the spectrum, first-time buyers and those seeking more affordable options will also feel the pinch of population growth in all five boroughs. Projections suggest that by 2020, Queens will overtake Brooklyn as the most populous region in the New York area. Historically, population forecasts are subject to variables like the economy, crime and terrorism, health and medical issues; however state and city officials agree with these projections for how fast we will grow and in such a relatively short period of time. Whether we are ready remains to be seen.