New tax laws hold modest change for investment real estate.  The highly anticipated tax reform legislation making its way through Congress could be signed into law by President Trump this month.  For real estate investors, the final versions appear relatively benign, with only modest changes to key provisions such as the 1031 tax-deferred exchange, mortgage interest deductibility and asset depreciation.  The two versions, one from the House of Representatives and one from the Senate, have… Read More

Job creation rebounded, adding 261,000 positions in October after hurricane-related effects in Texas and Florida caused a significant slowdown in the September data.  September initially showed negative 33,000 jobs but that has now been revised upward to 18,000.  The bounce back in employment had been expected as historically employment has recovered strongly in the months following major hurricanes.

Numerous high-wage industries generating stable base of renter households.  Powered by a diverse employment spectrum and containing more than 8.5 million residents, New York City benefits from a consistent supply of new households.  Due to the extreme price of single-family housing, the vast majority of the households seek rental accommodations, particularly in the core boroughs of Manhattan and Brooklyn where prices are highest.  As a result, vacancy rates in these boroughs, and broadly metrowide, have… Read More

Hurricane Harvey wrought severe damage across the Tex-as Gulf Coast region and southwest Louisiana.  The severe storm displaced thousands of families as it damaged in excess of 200,000 homes across the region.  The hurricane’s devastating floods hit the nation’s fifth-largest metropolitan area, Houston-The Woodlands-Sugarland, and although the final assessment of damages is likely months away, it is possible that Houston faces many of the challenges Hurricane Katrina created in New Orleans.

After falling to a five-decade low in the second quarter of last year, the homeownership rate is up almost a full percentage point to 63.7 percent in June.  The increase was driven by a rise in homeownership among millennials, among which the rate advanced 120 basis points year over year to 35.3 percent.  Though rising, the rate re-mains below the peak of 43.6 percent achieved in mid-2004.

Following the rounds of quantitative easing that pushed the Federal Reserve’s balance sheet to $4.5 trillion, the Federal Reserve has outlined plans to reduce the size of its holdings.  This will accelerate its effort to move toward more normalized monetary policy following nearly a decade of easing.  Although the Federal Reserve has raised short-term interest rates four times since the financial crisis took them to zero, the balance sheet has remained consistently near $4.5 trillion… Read More

The commercial real estate market may face gradual softening with signs that investors are proceeding more cautiously on new investment.

Accelerating job creation together with record-high employment openings have boosted confidence among younger workers, convincing many that now is the time to move out on their own.  These newly formed households are facing a tight housing market as apartment vacancy is below 4 perfect and single-family housing inventory to purchase sits near an all-time low.

Job creation and household formation underpin apartment demand.  Boasting a diverse range of industries and professions, New York City establishments remain steady job creators, even as the pace of employment growth has moderated in recent years.  Meanwhile, extensive development pipeline dominated by Brooklyn, Manhattan and Queens.  With more than 35,000 units slated for delivery in 2017, builders remain highly active in the metro.

As unemployment reaches a 16-year low, job creation is restrained.  This tight labor market offers a mixed outlook for commercial real estate.