First-time buyers drove the new development market in Manhattan in Q3 2020, picking up studio and one-bedroom residences, while buyers in Brooklyn sought more space with two-to four-bedroom purchases significantly up quarter-over-quarter, according to new Q3 2020 New Development Insights from Brown Harris Stevens Development Marketing (BHSDM).
In Manhattan, 12 studios and 55 one-bedroom residences went into contract in Q3, up 83 percent and 58 percent respectively quarter over quarter.
In Brooklyn, two- through four-bedrooms were all up more than 50 percent quarter over quarter, accounting for 60 percent of all new development sales in Brooklyn.
In total, 200 new development units went into contract in Brooklyn (37 percent increase quarter-over-quarter) and 154 new development units went into contract in Manhattan (44 percent increase quarter-over-quarter).
Q3 was largely flat with Q1 2020, which saw 167 units absorbed in Manhattan and 195 units absorbed in Brooklyn.
The average Q3 new development discount in Brooklyn from the last ask or last amendment was five percent while Manhattan saw larger discounts averaging 13 percent.
“This past quarter showed promise in returning to pre-lockdown levels, mirroring the strength we saw at the end of 2019 into the start of 2020. Buyers who have aspired to purchase in Manhattan are finally finding their moment with low interest rates, negotiability, and inventory opportunity,” said Stephen Kliegerman, president of Brown Harris Stevens Development Marketing.
“This is different in Brooklyn, where we are seeing buyers dive in or trade up for larger units, getting more space for their money, and hone in on farther out neighborhoods now that commuting is not as high on the priority list.”
Additional Brooklyn insights include:
· The median price for Brooklyn new development units on the market was $1.29 million, and an average per square foot of $1,326; while the median price for contracts signed was $992,000 and price-per-square-foot for contract signed units averaged $1,210. This reflects an increase from Q2 2020 which had a median contract price of $895,000 and average price-per-square-foot of $1,145.
· Brooklyn absorption decreased 18 percent in Q3 2020 over Q3 2019 (243 vs. 200) but there was a 37 percent increase in signed activity when comparing Q2 2020 and Q3 2020.
· The Central Brooklyn neighborhoods of Crown Heights, Bedford-Stuyvesant, Stuyvesant Heights, and Bushwick had the most contracts signed in the quarter (54), while the single neighborhood with the most absorption was in Downtown Brooklyn, followed by Bedford-Stuyvesant.
· Based upon Q3 absorption rates (16.6 units’ average a week) it will take roughly 7.5 months to absorb the 491 active units that are currently on the market. In Q2 since the reopening, absorption was 10.5 units a week vs. 16.6 units a week in Q3.
· Half the units that went into contract in Q3 were under $1 million (102 units); 38 percent was priced between $1 million and $2 million (75 units); 11 percent were priced between $2 million and $4 million (21 units); and 1 percent were priced between $6 million and $8 million (2 units).
Additional Manhattan insights include:
· In Manhattan, the median price for on the market new development for Q3 was $3.6 million and the average price-per-square-foot was $2,936; whereas median price for contracts signed in Q3 2020 was $2.37 million and average price-per-square-foot for contracts signed was $2,306.
· Manhattan had a 30 percent decrease in absorption of units in Q3 2020 over Q3 2019 (221 vs. 154).
· Whereas in Brooklyn 50 percent of absorbed inventory was under $1 million, just 11 percent (17 units) were priced under this threshold in Manhattan. Thirty-one percent (48 units) were priced between $1-2 million; 30 percent (46 units) were priced between $2-4 million; 21 percent (32 units) were priced between $4-8 million; and seven percent (11 units) were priced between $8-33 million.
· West 34th to 14th Streets had the most units signed in Manhattan (31 units), followed by Downtown East (24 units). This excludes buildings where all bulk listings entered the system in one day (46 units in total).
· Based on Q3 absorption rates (averaging 12.8 units a week), it would take roughly 22 months to absorb the 1,095 active units currently on the market in Manhattan.
“The discrepancy between median asking price for new development units and the average price for contracts signed illustrates that buyers are seeking more space for less money and are willing to enter submarkets that provide the best bang for their buck,” said Kliegerman.
Robin Schneiderman, managing director, BHSDM, added, “What’s really unique about the last two years is that each quarter has faced historic and unprecedented events that have shaped the real estate market. We saw a window at the end of 2019 and in early 2020 that normalized after the rush to sign before tax changes and lull thereafter, yet before the Covid shutdown. Q3 shows that we are once again stabilizing against that.”
These stats analyze what sold and what was listed during the lockdown for Manhattan and Brooklyn between July 1st to September 26th, 2020. This data tracks new development projects only, defined as those new to the market and currently selling sponsor units, excluding conversions that converted prior to 2016. Buildings that have fully sold out of sponsor units are not included, even though they may have recently been built. Resale data is not included in this report. All listings were compiled as of September 26th, 2020. All contract signed activity is based upon publicly reported contracts.