Selective Buyers Strike Cautious Stance; Retail Performance Remains Elevated

Diverse industry base powering household formation and retail demand. New York City, which hosts a broad array of industries, is powering demand for housing and allowing metro residents to form new households, driving demand for retail goods. Due to the high cost of housing, tenants overwhelmingly skew toward rental housing, providing a robust foot traffi c count for nearby retail establishments. Combined with the domination of higher-wage professional and healthcare workers in the metro, the city generates signifi cant revenue streams for local properties. Building on these dynamics, the metrowide vacancy rate has fallen to nearly 3 percent, underpinned by strength in Brooklyn and Queens where average rental rates can be nearly 50 percent lower than similar-size locations in Manhattan.

Manhattan and Brooklyn top development activity; interest in outer boroughs rising. While developers have remained most interested in core neighborhoods inside Brooklyn and Manhattan, interest is beginning to percolate in the outer boroughs, led by the Empire Outlets on Staten Island. In addition, Riverside Square in Westchester County brings a walkable shopping experience to the Dobbs Ferry waterfront. Meanwhile, Manhattan deliveries will be top-tier retail assets, led by the retail portion of 432 Park Ave. on the Upper East Side. Tight conditions will support rent growth yet will be dependent on location rather than broad improvement.