February 5, 2017
Developers are expected to open 30,000 new, rental apartments in New York City this year, mostly in Brooklyn and Manhattan. “Developers have expanded the project pipeline to one of the largest volumes in two decades,” according to Marcus & Millichap’s 2017 U.S. Multifamily Investment Forecast.
Any other city would be overwhelmed. In New York, robust net absorption will limit the uptick in the percentage of vacant apartments to a manageable level — more than 3% but less than 4%. Instead of high vacancy rates, NYC property managers worry they might not be able to raise rents as quickly.
“The sheer volume of new construction will diminish the prospects for substantial average effective rent growth over the coming year,” according to Marcus & Millichap.”Some operators may elect to selectively employ concessions.”
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