Hot Real Estate Market Could be Cooling as People Return to Work in Manhattan

By Joe Connolly and Neil A. Carousso

NEW YORK (WCBS 880) — There are signs of hope for Manhattan businesses that are reeling from the effects of the pandemic.

Office occupancies have not returned to pre-pandemic levels, yet, but heavy traffic is an indication people are returning to work in the big city. Jonathan Miller, president and CEO of Miller Samuel, Inc., believes the market should balance itself out.

He told Joe Connolly and Neil A. Carousso on the WCBS Small Business Spotlight, sponsored by Dime Community Bank, that we’ve reached “peak Zoom.”

“The outer boroughs really didn’t see the discounting or the correction in prices that Manhattan did,” said Miller, adding the so-called “exodus” was among wealthy New Yorkers and those able to work remotely during the pandemic. “Those discounts, I think, are really being compressed.”

Since the COVID shutdowns were lifted, some new businesses have taken advantage of lower rents in Manhattan and are eagerly awaiting people to return to the office.

“You have to remember that because 80 percent of the office towers are essentially empty, they’re waiting for that call back,” he said. “That call back really is going to take through at least early part of next year before we see critical mass assuming another variant doesn’t come into the picture.”

Miller believes the summer Delta variant surge pushed the city’s recovery back. He’s now seeing early signs of the housing market leveling off in the suburbs. The appraiser said home prices are plateauing, but not declining, as many employees continue to work remotely.

“When you think about not coming back in or delaying, and then, you look at markets like the Hamptons or the Hudson Valley where there’s been a tremendous amount of real estate activity, that activity has been fueled by low mortgage rates and remote work,” Miller said.

He believes the city’s residential market will see a youth renaissance. People like his youngest son have returned to Manhattan for career opportunities.

Homes across Connecticut’s Fairfield County and the Long Island suburbs sold above asking price in the second quarter of 2021, according to Miller Samuel.

“That’s a proxy for bidding wars,” said Miller.

Rather than look for a bargain, he advises homebuyers to look for places where home values will be sustained because remote and hybrid work is here to stay in some capacity.

“Everything has changed,” he said.

See how the volatile real estate market impacts businesses on the Small Business Spotlight video above.