NEW YORK CITY—Residential and commercial brokers in New York City are optimistic about the real estate financing market going forward, but do have misgivings about overall future leasing and sales activity in their respective sectors.
The Real Estate Board of New York released on Tuesday its quarterly Broker Confidence Index, which saw the overall residential and commercial real estate broker outlook in both the current and future real estate markets increased 0.02 from the first quarter of 2017 to 5.89 in the second quarter of 2017.
The Real Estate Broker Future Confidence Index, which measures broker confidence in the market six months from now, however, fell to 5.56 in the second quarter of 2017, a decline of 0.14 from last quarter. Brokers’ outlook on future commercial leasing, future residential rental market activity and future residential commissions was more reserved in the second quarter as compared to three months earlier, REBNY says.
“Our membership survey continued to reflect caution among our brokers who closely monitor economic indicators that are impacting activity across New York City’s commercial and residential real estate markets,” says REBNY president John Banks. “While our members report slower decision-making and price sensitivity, they remain positive about the market with optimism for improved financing conditions.”
Commercial brokers that participated in the REBNY survey were more optimistic than their counterparts in the residential sector. The Commercial Broker Confidence Index was 5.84 in the second quarter of 2017, an increase of 0.56 from the previous quarter, while the Commercial Broker Future Confidence Index increased 0.35 quarter-over-quarter to 5.28. Responses to a question regarding current commercial financing ratcheted up significantly higher to 7.42, an increase of 2.09 from the first quarter.
Commercial brokers were negative, however, on the six-month outlook on the leasing market. Respondents’ expectations of the future leasing market indexed at 3.78, down 1.01 since the first quarter of 2017. Commercial brokers complained to REBNY about the slower pace of leasing contracts at the moment.
“Many factors are affecting the leasing of commercial space, especially retail. One factor that is controllable is moderating the real estate tax increases that have occurred in the past decade,” said one commercial broker responding to the survey stated. Another broker observed, “The market is very cautious and there are not as many sales as last year. Buyers feel prices are too high and cap rates are too low.”
The Residential Broker Confidence Index in the second quarter registered at 5.94, down 0.52 from the first quarter of 2017. The Residential Broker Future Confidence Index also fell by 0.61 quarter-over-quarter to 5.85. Residential brokers’ confidence in future commissions dropped from an index of 6.90 to 5.92, REBNY reports.
“The New York City residential sales market is strong, but slow. Many of the new developments are experiencing good absorption, with fewer projects in the pipeline. Resale is slow, but well-priced units sell quickly,” explained one residential broker.
Another residential broker stated in a survey response, “The market is currently slow and deliberate. Buyers are holding back for exactly what they want, although there is not a great deal of inventory. Sellers are becoming more flexible.”
The residential brokers’ confidence index of the current and future rental market was low, but their expectations did not significantly decrease in the second quarter of 2017. Responses to the question about the current rental market were indexed at 3.07, an increase of 0.14 quarter-over-quarter. Their views on the future rental market were indexed at 3.31, a decrease of 0.51.
REBNY notes that brokers stated that demand among buyers and renters has softened, but they are upbeat about the current and future financing markets.