Fewer condos sold in Manhattan last month than in February, despite an uptick in the luxury market, while buyers in Brooklyn signed contracts for five more units than last month.
“With [March] demand closely resembling that of the pre-pandemic period, we may see some normalization of the market as mortgage rates stabilize,” said Marketproof CEO Kael Goodman.
Citywide, deal volume rose by 7% month-over-month, continuing an upward trajectory for the fourth month
Total dollar volume rose 18% to $796M, the best month since June of 2023The luxury market saw a 26% increase in deal volume from last month and a 7% increase in dollar volume
While the March numbers are upbeat, they fall short of the March average during the pandemic recovery (2021-2023) and align more closely with pre-pandemic (2015-2019) numbers
The upward momentum continues for the fourth month, though at a more subdued pace. Deal volume rose 7% from 262 in February to 281 in March. Deal count in Manhattan and Brooklyn was essentially unchanged, but Queens saw an uptick of 57%. The surge in Queens is attributed to a batch of 23 contracts reported at 134-16 35th Avenue. Total dollar volume increased by 18% to $769M from $676M. The median price per square foot (PPSF) dipped slightly from $1,635 to $1,587, and the median price decreased by 7% from $1.62M to $1.5M. The drop in unit price and PPSF reflects a more significant share of the deal volume originating in Queens, a borough with more modestly priced units.
While March’s performance improved month over month, the deal volume represents a 56% decrease compared to the average of 439 deals per month during the pandemic recovery period from 2021 to 2023. The demand in March 2024 aligns more closely with the 289 average during the pre-pandemic period from 2015 to 2019.
Of the 281 deals citywide, 133 (-1%) were in Manhattan, 107 (+5%) were in Brooklyn, and 41 (+57%) were signed in Queens.
LUXURY
The luxury segment saw deal volume jump by 26% month over month, reaching a nine-month peak of 43 contracts. The total dollar volume grew by 42% from $300M to $427M. The median price rose 7% from $5.9M to $6.4M, and the median PPSF was unchanged at $2,631.
One High Line led in deal volume with six contracts over $4M. The West Chelsea complex found buyers for 95 of 235 residences since sales launched a little over a year ago. Corcoran Sunshine Marketing Group handles sales and marketing.
125 Perry Street led in dollar volume with three contracts totaling $112M, or 26% of the luxury market. The West Village boutique has sold 3 of the 7 residences. Compass handles sales and marketing.
Of the 43 luxury deals this month, 40 were in Manhattan, and three were signed in Brooklyn.
U.S. job growth was strong last month, and the unemployment rate fell slightly. But wage growth remained contained, underscoring the growing belief among economists and policymakers that the country can keep adding jobs without fanning inflation.
U.S. employers added a seasonally adjusted 303,000 jobs in March, the Labor Department reported on Friday, significantly more than the 200,000 economists expected. The unemployment rate slipped to 3.8%, versus February’s 3.9%, in line with expectations.
Average hourly earnings in March rose 0.3% from the previous month. That put them up 4.1% from a year earlier, marking the smallest on-the-year gain since June 2021.
Stocks edged up following the report, and Treasury yields moved higher.
Investors have been on edge recently over economic data suggesting that Federal Reserve interest-rate cuts might not be imminent. A stronger-than-expected labor market could feed into those concerns—first because increased spending power for consumers could fuel inflation, and second because a strong labor market gives the central bank more leeway to wait before cutting rates.
The Fed is mandated to keep employment as strong as possible while keeping inflation under control. Balancing those objectives has put the central bank in a difficult position as it mulls cutting interest rates this year: Cut too soon, or by too much, and inflation could heat back up all over again. Wait too long, and the strain of high rates could damage the job market, pushing the economy into a recession.
The labor market has continued to add jobs over the past year despite high interest rates. At the same time, the unemployment rate has drifted up and wage gains have cooled. In March of last year, the unemployment rate was 3.5%.
Those dynamics have defied the conventional wisdom that, for inflation to cool, job creation would need to dramatically slow down.
Lately many economists and even Fed officials have come to believe that, in part as a result of immigration, the supply of available workers has increased. If that is right, the number of jobs can grow faster.
Supply alone isn’t enough to generate job gains, however; there has to be demand. At the moment, it still looks as if there is plenty of that. Layoff activity remains low, and the number of unfilled jobs is high, with the Labor Department reporting earlier this week that there were 8.8 million job openings as of the end of February. The job-opening rate, or openings as a share of filled and unfilled positions, was 5.3%. That has fallen over the past year, but in prepandemic 2019—a period of strength for the job market—that ratio averaged 4.5%.
But the share of people quitting their jobs each month has fallen to prepandemic levels, which indicates that the intensity with which businesses were hiring away workers from each other has subsided. Moreover, the private-sector job market has been drawing most of its strength from just two broad sectors—private education and healthcare, and leisure and hospitality.
Private education and healthcare added 88,000 jobs last month, while leisure and hospitality added 49,000. Combined, the two have accounted for 1.5 million of the 2.9 million jobs the U.S. has gained in the past year.
Economists at Bank of America call those sectors “high touch.” Much of the work must be done in person, and a lot of it—such as waiting tables or working in a hospice—entails face-to-face interactions.
High-touch employment fell sharply when the pandemic hit, and even now, four years later, appears low. Relative to the trend during the five years before the pandemic, there are some two million fewer jobs in those sectors than might have been expected.
This raises a question, points out Bank of America economist Michael Gapen. “Should we expect employment in those sectors to return to their prior trend line? Or are there structural reasons to think maybe the employment gap will not close and therefore this catch-up effect could finish sooner?” he said.
He thinks the answer might be mixed. Lately, employment growth in leisure and hospitality has moderated. One reason why is that for some of those employers, business is still down—think restaurants near offices where many people are still working from home a few days a week. Another is that some businesses adopted practices when labor became short that probably won’t get undone. Lots of restaurants, for example, introduced QR codes in place of paper menus, allowing customers to place orders with their phones rather than waitstaff.
But for private education and healthcare, the story could be different. The loss of jobs these areas experienced when the pandemic hit was truly exceptional: Other than in 2020, employment in the sector has experienced near constant growth over the 85 years of available data. Moreover, the healthcare needs of an aging U.S. population will probably only grow. The sector is still about a million jobs short of its old trend. If that gap continues to narrow, as Gapen expects it will, it could help bolster job growth into next year.
NEW YORK — Five years after Albany Democrats overhauled the state’s rent-stabilization laws, real estate executives are looking to weaken the reforms — bolstered by data they commissioned that validates their case.
New findings from a survey of 781 property owners and managers covering about 242,000 units contend the 2019 changes led to disinvestment and substantial vacancies in rent-stabilized housing. A significant share of respondents said it is “economically infeasible” to invest in needed upgrades to their buildings. The study, obtained by POLITICO, was conducted by consulting firm HR&A Advisors on behalf of the Real Estate Board of New York and the Rent Stabilization Association. While the findings are unsurprising, real estate leaders are using them to fuel their argument against the 5-year-old legislative changes.
The issue is now entering the early stages of negotiations in Albany, amid broader discussions around a wide-ranging deal to tackle an acute housing shortage.
Tenant activists and progressive lawmakers are already pushing back on any attempt to reverse the reforms, which starts out as a tall order in the Democratic-led state Legislature.
“This data indicates that the 2019 rent law changes are having increasingly negative impacts on rent-stabilized apartments and tenants,” James Whelan, president of REBNY, said in a statement. “State lawmakers should follow the data and advance policies that facilitate the rehabilitation of dilapidated apartments in a manner that results in quality affordable housing without recreating the dynamics of vacancy decontrol.”
Real estate groups argue the 5-year-old changes — which eliminated or significantly curtailed avenues to raise rents on the city’s roughly 1 million rent-regulated apartments — have left landlords unable to rehab apartments and rerent them when long-term tenants move out.
The idea — called “self serving” by a leading tenant activist — has gained traction among some moderate Democrats: A bill introduced last year by state Sen. Leroy Comrie and Assemblymember Kenny Burgos would allow rent-stabilized landlords to reset rents at vacancy to facilitate renovations. The current law allows only very limited increases if an owner is making an apartment or building improvement.
Some prominent legislators see Comrie’s introduction as a non-starter and question the industry’s claims.
“They’re saying, let’s turn the rent-regulation system on its head because we have many units that are in dire disrepair — I don’t buy that,” said Assemblymember Linda Rosenthal, chair of the body’s housing committee. “Many of my colleagues oppose that vehemently, so I don’t think it will gain much traction, and it shouldn’t. This is not the time to be trying to undo tenant protections.”
The survey found that for owners with small portfolios that are primarily rent-stabilized — those under 11 units — 25 percent of their apartments are currently vacant.
There are also fewer total vacant apartments than there were in 2018, but longer-term vacancies — defined as three years or more — have increased, the REBNY-commissioned survey found. And nearly one-third of respondents cited “economic infeasibility” of unit improvements after a long tenancy as a reason for continued vacancies.
RSA supports the bill introduced by Comrie and Burgos. REBNY is not pushing that specific legislation but said it agrees with its general goals, and sees it as one potential approach.
“There’s no way to adjust rent at vacancy anymore in the rent-stabilized universe,” Basha Gerhards, senior vice president of planning at REBNY, said in reference to landlords’ reported drop in operating income. “So do we allow some form of rent reset in exchange for the apartments being improved and the violations being cleared? It’s a question we are posing.”
State lawmakers are under pressure to take action on housing issues this year as the city struggles with the lowest rental vacancy rate in 50 years and residential construction slows amidst the absence of a key multi-family housing tax break.
After Democrats took control of the chamber, they eliminated “vacancy decontrol” — a mechanism that allowed units to leave the rent-stabilization program when they reached a certain threshold and became vacant. They additionally got rid of a provision that permitted landlords to raise rents by 20 percent when apartments became vacant, and significantly restricted rent increases attached to building and apartment improvements.
Those provisions had led to the loss of tens of thousands of rent-regulated apartments before the 2019 reforms went into effect.
The survey found owners still need to make those upgrades — things like replacing boilers or kitchen appliances — but are pursuing fewer improvements since they no longer pencil out financially. For example, RSA members filed 763 individual apartment improvements in 2023, down from 3,311 in 2019. For individual apartment improvements, the maximum landlords can spend on renovations that would be eligible for a rent increase calculation is $15,000 over 15 years.
“Whether it’s big systems like rewiring or plumbing, or bringing [units] up to code, complying to lead paint regulations — that’s well over $15,000 for an apartment, so there’s just no incentive,” said Frank Ricci, an executive vice president at RSA.
The city’s Department of Housing Preservation and Development estimated last year there are only 2,500 low-cost apartments that are both in need of repairs and have been vacant for a year or more. The agency says that figure is significantly lower now, based on the latest housing and vacancy survey, though it has not yet released a specific number, according to Gothamist. Ricci argued smaller buildings are under-surveyed by the city survey.
“By and large, there are just not that many vacant rent-stabilized apartments in New York City right now,” said Cea Weaver, campaign coordinator for the Housing Justice for All coalition, pointing to HPD’s data. “It’s very politically convenient and self-serving to say, oh we’re in trouble because of the [2019 reforms.] But it’s like no, you’re in trouble because you speculated on buildings that are 100 years old and a pandemic happened and other costs changed.”
Weaver and other progressive activists said they’re nonetheless taking the push very seriously — and reject any attempts to include it in a broader housing agreement, even if that deal includes a longstanding priority known as “good cause” eviction. That measure would effectively limit rent hikes in market-rate apartments.
“For the left, we know what rollbacks have felt like — we experienced that in the bail reform fight,” said Jasmine Gripper, co-director of the Working Families Party. “We’ve been communicating to elected leaders that this is a non-starter.”
Real gross domestic product (GDP) increased at an annual rate of 3.3 percent in the fourth quarter of 2023 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9 percent.
The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (refer to “Source Data for the Advance Estimate” on page 3). The “second” estimate for the fourth quarter, based on more complete data, will be released on February 28, 2024.
The increase in real GDP reflected increases in consumer spending, exports, state and local government spending, nonresidential fixed investment, federal government spending, private inventory investment, and residential fixed investment (table 2). Imports, which are a subtraction in the calculation of GDP, increased.
The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributors were food services and accommodations as well as health care. Within goods, the leading contributors to the increase were other nondurable goods (led by pharmaceutical products) and recreational goods and vehicles (led by computer software). Within exports, both goods (led by petroleum) and services (led by financial services) increased. The increase in state and local government spending primarily reflected increases in compensation of state and local government employees and investment in structures. The increase in nonresidential fixed investment reflected increases in intellectual property products, structures, and equipment. Within federal government spending, the increase was led by nondefense spending. The increase in inventory investment was led by wholesale trade industries. Within residential fixed investment, the increase reflected an increase in new residential structures that was partly offset by a decrease in brokers’ commissions. Within imports, the increase primarily reflected an increase in services (led by travel).
Compared to the third quarter of 2023, the deceleration in real GDP in the fourth quarter primarily reflected slowdowns in private inventory investment, federal government spending, residential fixed investment, and consumer spending. Imports decelerated.
Current‑dollar GDP increased 4.8 percent at an annual rate, or $328.7 billion, in the fourth quarter to a level of $27.94 trillion. In the third quarter, GDP increased 8.3 percent, or $547.1 billion (tables 1 and 3).
The price index for gross domestic purchases increased 1.9 percent in the fourth quarter, compared with an increase of 2.9 percent in the third quarter (table 4). The personal consumption expenditures (PCE) price index increased 1.7 percent, compared with an increase of 2.6 percent. Excluding food and energy prices, the PCE price index increased 2.0 percent, the same change as the third quarter.
Personal Income
Current-dollar personal income increased $224.8 billion in the fourth quarter, compared with an increase of $196.2 billion in the third quarter. The increase primarily reflected increases in compensation, personal income receipts on assets, and proprietors’ income that were partly offset by a decrease in personal current transfer receipts (table 8).
Disposable personal income increased $211.7 billion, or 4.2 percent, in the fourth quarter, compared with an increase of $143.5 billion, or 2.9 percent, in the third quarter. Real disposable personal income increased 2.5 percent, compared with an increase of 0.3 percent.
Personal saving was $818.9 billion in the fourth quarter, compared with $851.2 billion in the third quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 4.0 percent in the fourth quarter, compared with 4.2 percent in the third quarter.
GDP for 2023
Real GDP increased 2.5 percent in 2023 (from the 2022 annual level to the 2023 annual level), compared with an increase of 1.9 percent in 2022 (table 1). The increase in real GDP in 2023 primarily reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, exports, and federal government spending that were partly offset by decreases in residential fixed investment and inventory investment. Imports decreased (table 2).
The increase in consumer spending reflected increases in services (led by health care) and goods (led by recreational goods and vehicles). The increase in nonresidential fixed investment reflected increases in structures and intellectual property products. The increase in state and local government spending reflected increases in gross investment in structures and in compensation of state and local government employees. The increase in exports reflected increases in both goods and services. The increase in federal government spending reflected increases in both nondefense and defense spending.
The decrease in residential fixed investment mainly reflected a decrease in new single-family construction as well as brokers’ commissions. The decrease in private inventory investment primarily reflected a decrease in wholesale trade industries. Within imports, the decrease primarily reflected a decrease in goods.
Current-dollar GDP increased 6.3 percent, or $1.61 trillion, in 2023 to a level of $27.36 trillion, compared with an increase of 9.1 percent, or $2.15 trillion, in 2022 (tables 1 and 3).
The price index for gross domestic purchases increased 3.4 percent in 2023, compared with an increase of 6.8 percent in 2022 (table 4). The PCE price index increased 3.7 percent, compared with an increase of 6.5 percent. Excluding food and energy prices, the PCE price index increased 4.1 percent, compared with an increase of 5.2 percent.
Measured from the fourth quarter of 2022 to the fourth quarter of 2023, real GDP increased 3.1 percent during the period (table 6), compared with an increase of 0.7 percent from the fourth quarter of 2021 to the fourth quarter of 2022.
The price index for gross domestic purchases, as measured from the fourth quarter of 2022 to the fourth quarter of 2023, increased 2.4 percent, compared with an increase of 6.2 percent from the fourth quarter of 2021 to the fourth quarter of 2022. The PCE price index increased 2.7 percent, compared with an increase of 5.9 percent. Excluding food and energy, the PCE price index increased 3.2 percent, compared with 5.1 percent.
Source Data for the Advance Estimate
The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency. Information on the source data and key assumptions used in the advance estimate is provided in a Technical Note and a detailed “Key Source Data and Assumptions” file posted with the release. The “second” estimate for the fourth quarter, based on more complete data, will be released on February 28, 2024. For information on updates to GDP, refer to the “Additional Information” section that follows.
* * *
Next release, February 28, 2024, at 8:30 a.m. EST Gross Domestic Product (Second Estimate)
There’s some good news for apartment hunters: A lot more rentals were available last month in New York City compared to a year ago, a surge in inventory that caused rents to drop just slightly. If you’re looking for a new rental, this is likely to be the trend going forward.
It’s largely due to the calendar —the market has passed the peak summer rental season. Manhattan median rent for new leases in October was $4,195, down 3.6 percent compared to September, according to the latest edition of the Elliman Report, which looked at the Manhattan, Brooklyn, and Queens rental markets. There were larger monthly drops in median rent for Brooklyn (5.7 percent) and Queens (9.4 percent).
Rents are likely to remain flat with only small dips for the foreseeable future, says Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report. Don’t expect a sharp decrease—because that’s not how the NYC rental market works.
Even though rents were down on a monthly basis in Manhattan, they were still up 20 percent from the pre-pandemic era. (Manhattan’s median rent in October was also 4.6 percent higher than a year ago.)
Far fewer Manhattan renters signed new leases in October compared to the prior year, an indication that more renters are renewing their leases, which has been a pattern for the past four months. Lease signings dropped 31.3 percent compared to October 2022. Lease signings were also down 8.7 percent compared to the previous month.
Manhattan vacancy’s rate fell below 3 percent just one month after hitting that peak.
Increasing listings
The other part of this tale is rising inventory, which makes more competition for landlords and keeps them from raising rents, at least in the short term. Compared to a year ago, Manhattan apartment listings were up 31.3 percent last month.
Miller says inventory has been rising for the past six months but points out the market doesn’t have a glut like it did during the depths of the pandemic, when the number of available listings was triple what’s available in Manhattan now.
“Inventory is clearly up now but still significantly below the surplus we saw in 2021,” Miller says.
The Corcoran Group also released Manhattan and Brooklyn rental market reports for October. Gary Malin, chief operating officer at The Corcoran Group, notes that a decline in leasing is typical for this time of year, but the slowdown has reached Manhattan luxury rentals. These renters are not usually as price sensitive, he says.
Owners of luxury apartments lowered rents for new leases as a result, “the first pricing decline for doorman [rentals] in over two years,” Malin says.
Two multi-billion dollars federal lawsuits are currently being litigated (Moehrl, et al. v. NAR, et al. and Burnett (Sitzer), et al. V. NAR, et al.) that could greatly affect the way NAR members do business. The trial in the Burnett case started this week, and involves the four NAR-affiliated MLSs in Missouri, while the Moehrl case, pending in Chicago, is slated to go to trial next year and involves 20 NAR-affiliated MLSs in numerous states. In addition to NAR, four major brokerage firms were named in these suits: Realogy Holdings Corp. n/k/a Anywhere (the parent company of Better Homes and Gardens Real Estate, Century 21, Corcoran, ERA, Coldwell Banker Realty and Sotheby’s International Realty), Home Services of America, Inc., RE/MAX Holdings Inc. and Keller Williams Realty, Inc.
Specifically, the class plaintiffs claim that certain NAR MLS rules, including the blanket offer of compensation rule, require sellers to make a uniform offer of compensation to buy-side brokers in order to be able to list their properties on multiple listing services (“MLS”) and help to keep commissions high, and reduce the ability to negotiate for lower commissions. The brokerages appear to have been included in these class-actions because they require their agents to be members of the NAR in order to access the MLS’s where their listings were being placed, and also served in high ranking positions at NAR. The plaintiffs seek damages, and practice changes which will allow for greater negotiation of the commission rate to be paid in a transaction.
Two of the Brokerage firms, RE/MAX and Anywhere, recently settled with the plaintiffs for $55 and $83.5 million dollars, respectively. There are other conditions to these settlements involving practice changes that have been proposed and will be implemented following Court approval of the settlements. The settlements cover both the Burnett and Moehrl lawsuits, and therefore neither RE/MAX nor Anywhere is participating in the Burnett trial. The lawsuits against NAR and the two other remaining brokerages are ongoing. We will provide updates as more information becomes available.
Separate and apart from these lawsuits, members should be aware that REBNY is also working on making changes to the Universal Co-Brokerage Agreement (“UCBA”). This is not as a reaction to the lawsuits but rather these amendments are independently being reviewed in the constant effort to promote transparency and consumer confidence in the residential real estate transaction.
The University of Toronto’s analysis measured the number of visitors, including shoppers and tourists, plus residents and workers in the so-called “downtown” or business/tourist districts in major cities in the United States and Canada.
Lower Manhattan, including the Wall Street financial district, and Midtown, featuring Times Square, were considered the Big Apple’s “downtown” district for the study.
Researchers measured foot traffic through mobile phone presence, comparing March to mid-June in 2023 to the same period in 2019.
New York’s 66% recovery rate ranked 54th out of 66 cities surveyed.
Supermarket magnate and radio host John Catsimatidis told The Post on Sunday that workers need to return to the office.
“I’m very concerned about New York City,” he said. “Right now, Manhattan has one nail in the coffin.
New York City came in 54th place for downtown recovery out of 66 cities.
“If you impose congestion pricing to enter the business district, you’ll put two nails in the coffin,” he said, referring to the transit plan to charge drivers in certain city zones to try to discourage vehicles.
“You see nobody walking after dark.”
Democratic city Councilman Keith Powers, who represents Midtown East and West and Times Square, said the city needs to create more housing in the area to make up for the loss of office space and workers.
“We’ve made steady progress in getting people back to Midtown, but we need to be forward-thinking about the future and recognize changes to the work place,” he said. “One of our strategies is rezoning Midtown South to incentivize more housing and create a 24/7 neighborhood.”
Las Vegas ranked first, having 103% of the foot traffic — or 3% more — from pre-pandemic. The gambling mecca was the only city to have more foot traffic than before the COVID-19 outbreak.
A researcher for the study suggested the societal shift to remote office work has caused a dramatic drop in foot traffic in Gotham’s business districts.
“We’ve been tracking since early 2022, and New York was an early comeback story – but then stalled,” said Karen Chapple, director of the University of Toronto’s School of Cities, to The Post.
A researcher says that New York was an early comeback story after the lockdown until it stalled.
The researcher did note that unlike earlier studies, her project excluded Hudson Yards because it is not traditionally considered part of Midtown.
Other major cities that recovered most or considerably more foot traffic from the pre-pandemic period compared to the Big Apple include Miami (92%), Nashville (88%), Atlanta (85%), Los Angeles (83%) and San Diego (80%).
As with New York, there are other cities that have struggled to recover the pre-pandemic density in their central business district.
Chicago’s foot traffic was just 61% of what it was before the pandemic.
The recovery rate for Seattle and Minneapolis was under 60%.
Other non-downtown tourist areas in New York have seen a stronger increase in traffice.
High-tech San Francisco’s recovery rate was nearly identical to New York City’s — or 67%.
But the Partnership for the City Of New York, a major business advocacy group, questioned the accuracy of the University of Toronto’s data, citing more recent reports showing a stronger recovery in Manhattan’s key commerce and tourism districts.
Pedestrian foot traffic in Times Square averaged 285,000 in the last week of October 2023, or 80% of the pre-pandemic count of 356,000 during the equivalent week in 2019, it said.
In Downtown Brooklyn, monthly foot traffic reached 75% of pre-pandemic levels in June 2023.
“A lot of our pre-COVID foot traffic involved tourists, and international tourism is still down. We also have by far the densest concentration of office workers, so the hybrid work week has had a bigger impact here, with average weekday presence in the office [having] dropped from 80 % pre-pandemic to just under 60% today,” said Partnership CEO Kathryn Wylde.
Wylde also noted such studies don’t take into account the increase in foot traffic where many office employees now work and shop.
“On the other hand, the city has business districts across the five boroughs which have likely experienced an uptick in foot traffic as a result of work from home,” she said. “So I don’t think [the Big Apple’s] comparison with smaller cities with a single ‘downtown’ is a fair one.”
Broadway sales and attendance were at 85% and 81% of pre-pandemic levels, respectively, during the last week of October, the Partnership added.
Wylde pointed to other promising data points indicating a stronger recovery, noting that New York City’s regional airports had their busiest month in history, with more than 13.3 million passengers served in August and adding that the 192nd new business opened in Times Square in October, surpassing the 179 businesses that closed during the pandemic.
Recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated.
The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller.
The construction landscape in New York is slowing, with fewer construction starts taking place in 2023 compared with recent years.
This year, developers already have completed 8.3 million square feet across the first three quarters and are on pace to finish less than 10 million square feet, considering construction starts have declined in the past two quarters.
The projected year-end total is a notable drop, compared with the nearly 16 million built in 2022, and the 11 million built in both 2021 and 202
Adrian Ponsen, CoStar’s national director of industrial analytics, said the root cause of the slowdown is “the series of interest rate increases initiated by the Federal Reserve in early 2022, which has helped curtail the record wave of new distribution center development that was underway. Throughout the summer of 2023, industrial tenant demand softened and the pullback in groundbreakings grew more extreme.”
The slowdown in construction starts is occurring as completions are rising. About 11.7 million square feet has been completed so far in 2023. This figure is forecast to rise to nearly 17 million square feet by year’s end.
The completion of these newer industrial properties has played a part in the rise in industrial availability, as supply outpaced demand, with leasing activity underwhelming over the past 12 months. The availability rate in New York stands at 8.2%, a notable increase from the 5.7% measured at the start of 2022. The relative slowdown in leasing demand, the completion of more than 18 million square feet of new industrial space since 2022, and the negative 2.8 million square feet of annual negative absorption — or change in occupancy over a given period of time — driven by home goods retailers vacating distribution centers have been the main causes behind the rise in availability.
About 19.1 million square feet of industrial space is still under construction, which is a figure not far from the high of 22.6 million square feet during last year’s third quarter. This bevy of future supply is the driving force behind the continued vacancy increase forecast over the next 12 months. However, if the rate of new construction starts were to continue moderating, vacancy levels may begin tightening again by 2025 once the bulk of new buildings now under construction have been completed.
The US Fed expects interest rates to fall only half a percentage point in 2024, lower than market expectations.
Federal Reserve Chairman Jerome Powell arrives for a House Financial Services Committee hearing in Washington DC, US. The US Fed has ‘dialled up its expectations’ for a soft landing of the economy despite higher interest rates for longer [File: Andrew Harnik/AP Photo [Andrew Harnik/AP Photo]
The United States Federal Reserve held interest rates steady on Wednesday but stiffened its hawkish stance, with another rate increase projected by the end of the year and monetary policy kept significantly tighter through 2024 than previously expected.
As they did in June, Fed policymakers at the median still see the central bank’s benchmark overnight interest rate peaking this year in the 5.5 percent to 5.75 percent range, just a quarter of a percentage point above the current range.
But from there the Fed’s updated quarterly projections show rates falling only half a percentage point in 2024 compared with the full percentage point of cuts anticipated at the meeting in June.
With the federal funds rate falling to 5.1 percent by the end of 2024 and 3.9 percent by the end of 2025, the central bank’s main measure of inflation is projected to drop to 3.3 percent by the end of this year, to 2.5 percent next year and to 2.2 percent by the end of 2025.
The Fed expects to get inflation back to its 2 percent target in 2026, which is a later date than some officials had thought possible.
“Inflation remains elevated,” the rate-setting Federal Open Market Committee (FOMC) said in a policy statement that included projections incorporating stronger economic and job growth than prior forecasts, and keeping prospects for a “soft landing” squarely in view.
Financial markets had widely expected that the Fed would leave rates unchanged. But investors have also been banking on significant Fed rate cuts next year, an expectation clouded by the projections showing 10 of 19 officials see the policy rate remaining above 5 percent through next year.
After the release of the statement and projections, bond yields moved higher in the face of a higher-for-longer monetary policy stance, with the two-year Treasury note rising to its highest level since 2007. Stocks initially weakened while the dollar erased its losses for the day against a basket of major currencies.
Economic growth
The new projections include a substantial markup of projections for economic growth: After expecting growth as weak as 0.4 percent for this year in earlier projections, the Fed now sees the economy growing 2.1 percent in 2023.
The unemployment rate is also seen remaining steady at about 3.8 percent this year and rising to just 4.1 percent by year’s end – a vote of confidence in the possibility of containing the worst breakout of inflation since the 1980s without significant job losses.
But the projections also threaten companies and households with the possibility of even tighter credit conditions and higher borrowing costs than they have already absorbed during the Fed’s aggressive two-year battle to contain inflation, embodying a philosophy of “higher for longer” into the latest projections.
In the wake of the Fed statement, economists saw central bank officials as more confident they will be able to quash inflation without causing broader economic pain.
“The message conveyed in their upward revision to growth and their downward revision to the unemployment rate in 2024 clearly indicate a Fed that has dialled up their expectation for a soft landing, despite higher for longer rates,” said Olu Sonola, head of US economics at Fitch Ratings.
The Fed’s forecasts caught some observers off-guard, especially in the new view of a slower-than-thought decline in inflation pressures. Omair Sharif of forecasting firm Inflation Insights said that given the Fed outlook it was not surprising to see a hawkish shift in the monetary policy outlook, while adding that when it comes to officials’ outlook, “it’s oddly optimistic on the labour market and equally oddly pessimistic on core inflation this year.”
The Fed statement was approved unanimously after a two-day meeting that marked new Fed Governor Adriana Kugler’s debut on the central bank policymaking stage.
