Multifamily fundamentals remain strong in the New York metro, with healthy rent growth and occupancy rates.
According to RealPage, effective asking rent growth for the metro was 1.8% in the second quarter, about 1.5 percentage points above the national average. It also had the tightest occupancy rate recorded among major markets in the second quarter at 97%, although it was down about 20 basis points from the same period in 2023. Across the Hudson River, Newark-Jersey City had the second-tightest occupancy rate at 96.2%, while the national average was at 94.2% for the second quarter.
“The biggest headwind in New York is the longstanding undersupply of housing. There are a number of influences that have kept availability of apartments remarkably limited—again, the market’s occupancy of 97%-plus is easily the highest in the nation,” says RealPage chief economist Carl Whitaker. “Some good news is that the current construction levels remain very high by historic standards, which should help provide much-needed housing in the market.”
As of the second quarter, 51,700 market-rate units were underway in New York, representing 2.7% of all existing apartment inventory. In the 2010s, the metro saw an average of roughly 22,300 units under construction in a given year, with peak volume of 39,000 units in 2016 that was primarily a byproduct of the expiration of the 421-a tax abatement.
Whitaker says the most distinguishing trait in today’s pipeline is that it hasn’t fallen off the peak. As of the second quarter, construction was just 3% below the peak, which was set in the first quarter. This is a much smaller pullback compared with the nation, which is down 20% off the peak set in early 2023.
“New York is likely going to see a peak delivery period that is lagged relative to the United States overall,” he says. “Whereas the nation is likely going to see peak annual supply in early to mid-2025, New York is expected to see peak supply in 2026. But considering the market is often troubled by construction delays, there’s a chance that peak supply in New York could push as far out as 2027.”
Brooklyn had the most amount of units under construction in the second quarter—21,600—accounting for 42% of the total metro area. Queens followed with 12,200 units. Whitaker notes two areas that stand out on a relative inventory growth basis are Manhattan’s Financial District and South Westchester County. The Financial District has 2,600 units underway, which is 10% of all inventory and comprises over half of the 5,000 units under construction in Manhattan. South Westchester County has 5,300 units underway, a little more than 6% of existing inventory.
He adds that Westchester County, particularly Yonkers, New Rochelle, and even as far north as White Plains, and the Newark metro area have seen significant development interest in recent quarters.
“What appears to be happening is that those outer lying areas are capturing some pent-up demand from Manhattan, in particular,” Whitaker says. “As new supply has become available in those neighborhoods, that’s allowed a new channel through which demand can flow, which was historically pent up due to such tight occupancy in Manhattan. This has been further supported by more flexible and hybrid work arrangements too.”
