Ho, Ho, Holy Moly What a Year!

As 2021 comes to a close, the universe threw one more big variable into the mix in the name of Omicron.

Fortunately, early indications are that the Covid-19 variant presents mild symptoms and while it is expected to spread quickly, may be underwhelming in its lethality. Famed investor Bill Ackman had this to say:

“While it is too early to have definitive data, early reported data suggest that the Omicron virus causes ‘mild to moderate’ symptoms (less severity) and is more transmissible,” Ackman said in a tweet Sunday evening. “If this turns out to be true, this is bullish not bearish for markets.”

This is in stark contrast to his comments in 2020, when he warned that “hell is coming” and urged a shutdown of the country to prevent spread of the virus.

Since he made these comments in late November, no new data has emerged to suggest that Omicron is as sinister as originally feared.  Moderna has already announced it will have an Omicron-specific booster available by March and Pfizer is working on one as well.  In short, we believe that Omicron presents nothing but a relatively minor speed-bump in our return to normalcy, and should not impede the bull market in New York City real estate that we’ve been predicting for 2022.

The New York City real estate market remains strong

The residential rental market has experienced substantial strength, as we have reported in recent newsletters, with something like half to three quarters of free market rentals now above pre-pandemic pricing (depending on which report you read).

The sales market has been very strong, particularly at the high end, with Thanksgiving week showing the strongest results in the luxury sector since the Olshan Report started reporting in 2006.  Miller Samuel reports that contract signings in Manhattan and Brooklyn continue to outpace supply, which will lead to a competitive market in the spring.

Finally, the investment sales market is recovering nicely from 2020’s abyss, with commercial investment sales transactions tracking to end 2021 over 30% up over a year earlier.  Commercial leasing has been similarly brisk, with office tenants leasing over 3 million square feet in November – the first time NYC has seen that pace since January 2020, according to Colliers.

Let’s recap

Residential sales: Up

Residential rentals: Up

Commercial sales: Up

Commercial leasing: Up

Interest rates: Down ( Jan 2020 30 year fixed 3.65%, now 3.11%)

Stock market: Up big, even with Omicron dip (Jan 2020 S&P 3,250 vs 4,538 now)

Does this look like a real estate crisis about to happen in the city?  We don’t think so.  Get prepared for a brisk 2022 with strong transaction volumes and higher prices.