The Wall Street Journal's Keiko Morris looks at the glut of new units--particularly aimed at the high end--that are coming through the pipeline in New York City, and its affect on both rent growth and the transaction market.
More than 38,000 market-rate units are expected to come on line over the next three years, with a heavy concentration in Brooklyn and Queens. This year alone, more than 14,600 will open their doors.
The forecast from a recent Ten-X report is stark: The supply increase will result in market-rate vacancies of more than 10% by 2017 and zero rent growth for market-rate apartments in 2019.
“I refer to it as a digestion problem,” said Peter Muoio, chief economist and head of research at Ten-X. “There is so much, so fast at one point in time, that it’s difficult for any market to absorb that wave of supply.”