Brooklyn Multifamily Report – Summer 2020
The borough's rental segment continues to absorb the effects of New York City's initial coronavirus wave.
New York City was one of the country’s first COVID-19 hot spots, and the pandemic’s impact on its multifamily sector was immediate. Economic uncertainty pulled rental rates down, as in-person showings were banned for roughly three months due to lockdown measures. Brooklyn rents contracted by 0.8 percent to $2,878 on a trailing three-month basis through June, while the national average recorded only a 30-basis point slide to $1,457.
No employment sector was shielded from the coronavirus induced downturn. Those working in restaurants, malls and the travel industry were the first to feel the effects, but others soon followed suit as stay-at-home orders drastically reduced demand for most services. Even jobs in the public sector are in jeopardy: The city’s $10 billion budget deficit could generate layoffs of 22,000 city employees in October. In the meantime, New York City entered Phase 4 of reopening at the end of July.
Outdoor arts and entertainment venues, along with professional sports—without fans—were allowed to resume activity. Only $168 million in multifamily assets changed hands during 2020’s first half, and developers added 1,954 units to the borough’s inventory. With investor confidence shaken and the pandemic still unfolding, it remains to be seen how the Brooklyn multifamily market will emerge from the crisis, and, ultimately, bounce back.