The new development market in New York City is making a strong comeback, nearing pre-pandemic performance. Despite closed sales being down nearly 13% year-over-year, contract signings saw an 8% increase in the third quarter, according to data from Marketproof. Contracts for units priced over $10 million surged by 39%, marking a notable uptick in luxury real estate.
Manhattan signed 389 contracts in the quarter, while Brooklyn followed with 231 deals, signaling that overall demand has settled back to pre-pandemic averages. Jason Thomas, Senior Vice President of Research and Analytics at Brown Harris Stevens Development Marketing (BHSDM), noted that this normalization is what the market needed after a period of volatility.
Manhattan’s Luxury Market Leads the Comeback
Manhattan’s return to pre-pandemic levels is even more impressive, given that interest rates remain two to three percentage points higher than before 2020. According to Robin Schneiderman, Managing Director at BHSDM, buyer optimism, fueled by recent Federal Reserve rate cuts, is driving this resurgence in demand for high-end real estate.
The luxury sector was a standout, with contracts for properties priced over $10 million increasing by 39%. Units priced between $7 million and $10 million saw a 10% rise. September alone saw 47 contracts signed for properties over $4 million, compared to 27 in the same period last year.
The Midtown East area played a crucial role in Manhattan’s success, driven largely by the performance of 520 Fifth Avenue, a 99-unit supertall building by Mickey Rabina. This development has already sold 70% of its units since sales launched in April, with 37 contracts signed last quarter — the most for any building in the city.
Brooklyn’s All-Time High Asking Prices
While Brooklyn’s contract signings lagged behind Manhattan, its pricing per square foot hit an all-time high of $1,383. The narrowing price gap between Manhattan and Brooklyn could explain Manhattan’s relative outperformance. At the same time, Brooklyn’s limited inventory and rising prices suggest a ripe opportunity for developers to invest in the borough.
Conclusion
With both Manhattan and Brooklyn seeing strong demand, especially in the luxury sector, New York City’s new development market is bouncing back to pre-pandemic levels. The combination of lower asking prices in Manhattan and record highs in Brooklyn suggests developers will continue to find opportunities to thrive in this shifting landscape.
