Supply Wave Softens Demand in Queens
This year’s multifamily development is expected to reach a cycle peak in the borough, which continues to benefit from Manhattan’s prohibitive prices.
Queens rent evolution, click to enlarge
Following nationwide trends, Queens’ expanding multifamily pipeline is on course to hit a peak for the current cycle in 2018. Rising affordability issues and possible oversupply in key areas of the New York City borough could further soften the market in the short term. Queens rents were down 50 basis points year-over-year through March, as job gains across the metro decelerated and demand hit a small bump.
Metro New York added 84,200 jobs in 2017 for a 1.6 percent expansion, almost on par with the national average. Like neighboring Brooklyn, Queens continues to benefit from Manhattan’s prohibitive prices, which are pricing out some residents and prompting some office-using companies choose to settle across the East River. And although most large-scale construction projects are concentrated in Long Island City, several areas further east—including Willets Point in Jamaica and Edgmere—could see significant development in the coming years.
Roughly 1,600 units came online last year, and another 11,000 units were underway as of March. Queens should remain a stable market in the long run, due to New York City’s solid fundamentals, and because affordability in the outer boroughs, although a pressing concern, is nowhere as pressing an issue as it is in Manhattan. Occupancy in stabilized properties slid 50 basis points in 2017, but at 98.3 percent as of December, remains above the 95.2 percent U.S. average. Overall, we expect New York City rents to decline 1.0 percent in 2018.
Read the full Yardi Matrix report.
