Market Data Market Reports

Luxury Demand Is Returning to the Manhattan New Development Market

By Kenny Lee August 1, 2023

Key Takeaways

Table of Contents

    Overview

    Across New York City, 1,047 sponsor condo units on StreetEasy® entered contract in Q2 2023, a 19.1% increase from the previous quarter but 7.5% fewer than a year ago. The median asking price of all sponsor condo units on the market was $1.62M in Q2 this year, up 0.3% year-over-year. By most measures, this spring was a highly competitive market for sponsor condos. 

    Home shoppers have not retreated from the NYC market despite mortgage rates more than doubling since January of last year, rising above 6.7% in July. While the number of sponsor sales in Q2 this year was more modest compared to an overheated market in Q2 2022, 24.8% more sponsor condo listings entered contract than in Q2 2019 before the pandemic.

    A typical sponsor condo listing in NYC received 97.8% of its original asking price in Q2 2023, indicating there isn’t a lot of room for negotiation for buyers. The sale-to-list price ratio compares a home’s final recorded sale price to its initial asking price. The current median ratio of 97.8% is slightly lower than the three-year average (2017-2019) of 98.5% before the pandemic. In Q2 2022 — when fierce competition among buyers, ahead of expected increases in mortgage rates, gave developers the upper hand in NYC’s new development market — the sale-to-list price ratio rose to 99.4%.

    Looking Ahead

    In the second half of this year, developers will likely keep the upper hand as citywide sponsor listing inventory continues to decline. All the while, more buyers will consider new developments despite their premium, because buyers are left with limited non-sponsor listing inventory. There were 2,793 sponsor condo listings on StreetEasy in Q2 2023, a 7% decline from a year ago. Fewer listings have been hitting the market this year, as contract signings slowed after an overheated market last year. In Q2 2023, 1,027 sponsor condos were newly listed on the market, a 20.9% decline year-over-year. This follows a 25.9% year-over-year decline in Q1 2023.

    Luxury New Developments Are Redefining “Luxury” in Manhattan

    As the luxury market heats up in Manhattan, the median asking price of sponsor listings in the borough rose 7.2% year-over-year to $2.995M in Q2 2023. The number of new sponsor contracts rose 9% from Q1 to 437 units. Although the number of listings newly under contract is down 18.5% from a year ago, it’s up substantially by 35.7% from the same quarter in 2019. The median sale-to-list price ratio for sponsor condos in Manhattan was 95.9% in Q2 2023, down from its post-pandemic peak of 98.6% in Q2 2022.

    Close to one in five new contracts (78 out of 437) in Manhattan was priced above $5.975M in Q2 2023 —  a threshold for “luxury” in the city’s condo market amounting to the top 10% by price point. The priciest sponsor contract in Manhattan, as well as the entire city, in Q2 2023 was a full-floor penthouse at One High Line with a $52M price tag, 6,933 square feet of floor space, 6 bedrooms, and 7.5 bathrooms.

    A full-floor penthouse at One High Line with a $52M price tag was the most expensive sponsor contract in Manhattan, and the entire city, in Q2 2023.

    The luxury condo market is rebounding this year after a slowdown in the second half of 2022. The current price point of $5.975M for the top 10% of the city’s condo market is already 10.6% higher than a year ago as sellers continue to test the market and see how much they can get for their homes. The latest record of 78 luxury sponsor contracts in Manhattan is a substantial recovery from the second half of 2022, when 46 contracts were signed in Q3 and 34 in Q4 — the slowest quarter since 2020. The highest quarter was Q4 2021, when the sponsor market saw 131 luxury contracts. This record high number of contracts then coincided with peak stock prices since the pandemic, which was then followed by a bear market in 2022. 

    The rising momentum in the luxury market now may be related to improving confidence among buyers, with the stock market’s rebound this year and strong economic data suggesting lower risk of a recession in the US. As high-net-worth buyers look past the risk of entering the market at the wrong time, the luxury market will likely remain strong this year. 

    Brooklyn Saw the Strongest Jump in Sales Volume This Quarter

    In Brooklyn, 397 sponsor condo listings entered contract in Q2 2023, a sharp increase of 24.8% from Q1. Compared to last year, 6.4% fewer listings are entering contract in Brooklyn, but the number of new contracts now is 46% higher than Q2 2019. The median asking price declined 1.9% year-over-year to $1.055M. That said, there’s little room for negotiation for buyers, with the median sale-to-list ratio at 98.9%. This is still a small relief for buyers compared to Q2 2022, when the median sale-to-list ratio hit 100% in Brooklyn — the only borough in NYC to reach 100% between 2020 and 2022.

    Williamsburg saw the most sponsor contracts in Q2 2023 and has been a popular neighborhood for condos in general.

    The Brooklyn neighborhoods that saw the most sponsor contracts were Williamsburg (54), Bedford-Stuyvesant (40), and Park Slope (35). In particular, StreetEasy data on buyer inquiries shows Williamsburg has been a popular spot for condos in general. Together, these three neighborhoods accounted for nearly a third (32.5%) of all sponsor condo sales in the borough in Q2 2023. Compared to other sought-after Brooklyn neighborhoods, sponsor listings in these areas offer more space per dollar — an attractive option for buyers seeking modern amenities that new developments offer, but who are unable to afford the top-tier market by price point. The median price per square foot was $1,512 in Williamsburg, $942 in Bedford-Stuyvesant, and $1,576 in Park Slope in Q2 2023. In comparison, the most expensive neighborhood in Brooklyn by this metric was Brooklyn Heights, with the median price per square foot at $1,845.

    Long Island City Is Leading the Sponsor Market in Queens

    Queens remains highly competitive despite the soaring popularity of sponsor units in Manhattan and Brooklyn. In Q2 2023, 211 sponsor condo listings in the borough entered contract, up 33.5% from the previous quarter and 24.1% from Q2 last year. The top neighborhood by the number of new contracts in Queens – as well as NYC – was Long Island City with 93 new contracts recorded on StreetEasy in Q2 2023. The borough-wide median asking price of sponsor condo listings was $772,745 in Q2 2023, down 5.2% year-over-year. Long Island City, the most in-demand condo market in Queens this year, is leading the sponsor market in Queens. The median asking price of sponsor condo listings in the neighborhood rose 9.2% year-over-year to $1.2M. The median price per square foot was $1,612, higher than all three Brooklyn neighborhoods that saw the most sponsor contracts in Q2 2023.

    The median asking price of sponsor condo listings in Long Island City rose 9.2% year-over-year to $1.2M in Q2 2023.

    Sponsor listing inventory is rising in Queens along with the sales volume, signifying a virtuous cycle in which rising demand is met with rising inventory. There were 508 sponsor listings in the borough on StreetEasy in Q2 2023, up 16% year-over-year. The inventory growth likely reflects developers putting more listings on the market in response to strong demand for new developments in the area. A typical sponsor listing in Queens received 100% of its initial asking price in Q2 2023, suggesting more competition among buyers than in Manhattan and Brooklyn.

    The popularity of new developments in Queens is likely due to their affordability compared to Manhattan and Brooklyn. With lower asking prices per square foot, buyers have more purchasing power in Queens. The median price per square foot was $1,150 in the borough, lower than Manhattan by $983 and Brooklyn by $47. This means with the same budget, sponsor unit buyers looking in Queens can score a whopping 85% more space than they would in Manhattan, and 4% more space than they would in Brooklyn.

    Amenity-Rich Rental Market

    The citywide median asking rent rose 9.1% year-over-year to $3,600 in Q2 2023, the highest level on StreetEasy record stretching back to 2010. The overall market remains highly competitive for renters due to strong demand. An average listing on StreetEasy received 77.5% more inquiries from renters in Q2 2023 compared to Q2 2019.

    Rising rents are encouraging more landlords to list vacant units on the market. There were 75,148 rental listings in Q2 2023, up 13.6% year-over-year. In Q1 2023, rental listing inventory rose 8.5% year-over-year. That said, current inventory is still lower than Q2 2019 by 19.9%, contributing to competition among renters for available units.

    Inventory of amenity-rich rentals has been rising annually since Q3 2022.

    The median asking rent for amenity-rich rentals in the city was $5,250 in Q2 2023, up 5% year-over-year. This is also the highest level on StreetEasy record stretching back to 2010. We define “amenity-rich” rentals as those that offer in-unit laundry, a dishwasher, an elevator, and a doorman – four of the top five must-have amenities in NYC based on StreetEasy search data – in addition to a gym or pool in the building. These highly popular amenities are often found in newly developed rental buildings and luxury condos.

    There were 10,496 amenity-rich rental listings on StreetEasy in Q2 2023, up 37.9% year-over-year. More than half of these listings (57.7%) were in Manhattan, which saw the strongest increase in rental inventory in the city. Inventory of amenity-rich rentals has been rising annually since Q3 2022, and as a result, more landlords are offering concessions across the city. In Q2 2023, 26.2% of amenity-rich rentals offered at least one month of free rent, an increase from 18.7% in Q2 2022 when the market was red hot across the board. That said, the current market is still competitive compared to Q2 2019  when 38.7% of amenity-rich rentals offered concessions. Rising inventory will gradually ease competition among renters and slow the pace of rent growth in the second half of this year. 

    Competitive Neighborhoods for Amenity-Rich Rentals

    Using StreetEasy data, we identified the 10 most competitive neighborhoods for amenity-rich rentals in Q2 2023. We ranked their competitiveness based on: share of rentals that offered at least one month of free rent, share of rentals that reduced asking rents during their listing period, and year-over-year change in median asking rent. Renters can expect heightened competition for amenity-rich rentals in these neighborhoods.

    Among these top 10 neighborhoods, five were in Manhattan. With more New Yorkers commuting to the office at least part time, demand for amenity-rich rentals is returning to Manhattan. Notably, the Upper East Side jumped to the top of our list in Q2 2023 from 13th place in Q2 2022. Only 11.5% of amenity-rich listings offered concessions, suggesting little competition among landlords. Median asking rents for amenity-rich rentals rose 12.8% year-over-year to $8,460, reflecting strong confidence among landlords in these neighborhoods. 

    Midtown ranked second due to a higher share of amenity-rich rentals offering discounts than in the Upper East Side. In Midtown, 26.2% of amenity-rich listings lowered asking rents while on the market, higher than 20.8% in the Upper East Side. The higher share of discounted rentals suggests some landlords priced their listings too high in Midtown. That said, the overall market for amenity-rich rentals remains strong, with the median asking rent rising sharply by 25.2% from last year to $8,000 in Midtown. 

    Williamsburg remained the most competitive neighborhood in Brooklyn, although its citywide rank slipped to fourth from first from a year ago. In Williamsburg, 15% of amenity-rich rentals offered concessions and 12.4% lowered asking rents in Q2 2023. Compare that to 9.1% of listings offering concessions and 4.9% lowering asking rents in Q2 2022. These rises are likely due to shifting demand for amenity-rich rentals to Manhattan and increase in new rental buildings in nearby neighborhoods.

    The neighborhood vying for the top spot in Brooklyn is Bushwick. The recent increase in new developments in the neighborhood and their affordability relative to Williamsburg have led to a rise in interest from renters looking for amenity-rich homes. The median asking rent in Bushwick was $3,613 in Q2 2023, up 9.5% year-over-year but 25.5% lower than $4,850 in Williamsburg. However, the recent jump in listing inventory also means more competition among landlords. In Q2 2023, 73.8% of amenity-rich listings in Bushwick offered concessions, more than triple the share for the entire city (26.2%).   

    Methodology for Most Competitive Neighborhoods for Amenity-Rich Rentals

    Using StreetEasy data, we scored the competitiveness of the amenity-rich rental market in each neighborhood based on share of rentals that offered at least one month of free rent, share of rentals that reduced asking rents during their listing period, and year-over-year change in median asking rent. Each metric was assigned the same weight. A score of 100 means a neighborhood topped all other NYC neighborhoods in each metric. A score of 0 means a neighborhood was at the bottom in each metric. Renters can expect heightened competition for amenity-rich rentals in neighborhoods with a higher competitiveness score.

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    Disclaimers: The information provided was extracted from StreetEasy listings and its expansive internal database. The contents of this article are intended for informational purposes only and not intended as a complete recitation of the market.

    StreetEasy is an assumed name of Zillow, Inc. which has a real estate brokerage license in all 50 states and D.C. See real estate licenses. StreetEasy does not intend to interfere with any agency agreement you may have with a real estate professional or solicit your business if you are already under contract to purchase or sell property.

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