COVID-19 resulted in many of us overlooking the possibility that a large number of employees will work remotely well into 2021 and possibly even 2022. Currently, only 120,000 of the City’s office workers have physically returned to their offices. This presents a unique long-term opportunity for investors and purchasers in New York City because most real estate developers believe that New York City real estate will bounce back around 2022 or 2023. Here are four reasons why you should consider buying real property in 2020:
Reconfiguration in office spaces to accommodate social distancing policies are costly, especially if workers only return around 2022 or 2023 when developers and property owners will incur these reconfiguration costs a second time. This provides for better leverage when purchasing a property from a seller as the seller may be more inclined to shift the cost of reconfiguration on a new buyer and leave the project altogether.
- Reliance on Public Transportation
It is important to mention that COVID-19 has hindered public transportation in a major way. As of August 17th-21st, subway ridership is down nearly 75%. This works well for purchasers because if they can hold out for the duration of the time before a vaccination becomes available, their investment in today’s market should grow exponentially over the next 2 or 3 years.
- REIT’s Are Suffering
When analyzing the main REIT’s in New York City, the top three are: Vornado, SL Green, and Empire State Realty. All three of these major REIT’s are down more than 44%. As a result, all of them have cut dividends and are speculative as to when they can see profits going forward. This works well for purchasers since all three major REITs are inclined to sell to generate their investor’s profits.
- Decrease in Price Per Square Foot.
Finally, for those who believe that New York is still alive, it may be a great long-term purchasing opportunity considering rent per square footage in New York has taken a drop since 2018 due to the impacts of COVID-19. In 2018, the price per square foot, on average, was $77.15. It is estimated that in 2022, the price per square foot will be estimated at $69.92.
Chaves Perlowitz Luftig LLP is one of the most highly regarded real estate and estate planning firms in New York City. Our team of top-rated real estate attorneys and estate planning lawyers have extensive knowledge, resources, and connections to help you achieve your goals and plan for the future.