Northeast

The overall state of the market in the Northeast has changed little since our last report.

Cities across the region continue to face difficulties adapting to remote work, which diminished the demand for commercial real estate. In late July, an office building in Manhattan made headlines for selling at an almost 98% discount from its 2006 purchase price. Currently, around 20% of offices remain unoccupied, leading to a notable decline in foot traffic in many downtown areas. Banks and other financial institutions have signaled that they will begin requiring workers to return to the office, but this has yet to materialize.

Issues with the commercial real estate sector can present a solution for the region’s housing prices. Converting unneeded offices to badly needed apartments makes a lot of sense on paper, but is prohibitively complicated and expensive in practice. If commercial property prices continue to fall, however, more resources can be allocated for conversion rather than acquisition. Adaptive reuse projects have been gaining permitting approval across the region.

Despite these developments, there remains considerable work to be done in the region. The infrastructure sector, bolstered by deferral spending, is thriving. Several new manufacturing facilities are also in development, along with data centers and hospitals. These projects represent a significant opportunity for the market, as they will likely one day anchor affordable housing and mixed-use projects.

Nationwide, the country faces an estimated shortfall of roughly three million homes. Roughly one million of these are in the area around New York City. Housing shortages are more pronounced here than anywhere outside of California. Much of the residential construction over the last few years has been high-end, luxury developments that are not meant to be widely affordable. Below, we have provided more detail about the state of the market in the Northeast.

* Other structures include religious buildings, amusement, government communications, and public recreation projects.