Residential real estate in New York City is a tenant's market. Samuel Zell, the Founder and CEO of Equity Group Investments, more prominently known Equity Residential (NYSE: EQR), was recently invited by Bloomberg to give an interview about the New York real estate market. In the Bloomberg interview, Zell shares that the real estate market is benign, specifically mentioning residential real estate. He continues on to say that the biggest reason is that supply is at an all-time high. 

Decrease in Price

On Wednesday, February 22nd, the Toll Brothers (NYSE: TOL) released their first quarter earnings release. Yahoo Finance reports that the Toll Brothers stated, "both sales activity and prices have slipped, except on small and moderately priced units." In the same report, the Federal Reserve commented, "New York City's rental market has weakened noticeably, as rents for smaller units have leveled off, while rents of larger units have declined." It has been noted in recent weeks that "Manhattan rental prices were down 3.4% over last year in January, while inventory rose almost 14%."

Developments in New York City

There are two big reasons that there is a decrease in price within the residential real estate market in New York City. First, the supply is overwhelming. Hudson Yards on the west side of Manhattan has been a huge development project that is changing the landscape of the New York City skyline, with many tall skyscraper luxury rentals being built as a mixed-use building. By combining both residential and commercial, real estate developers are seeking to bring an innovative approach to the real estate market. The second reason that there is a decrease in price is transportation. According to Metro, the President of Citi Habitats, Gary Malin said, "with myriad new transportation options, including Uber, Lyft, CitiBike and several new subway lines, the sense of isolation in farther areas is going away." People now have greater access to live in places that do not necessarily have a subway or bus station nearby. This reason alone has convinced real estate developers to take advantage of developing buildings on the far east and west of Manhattan, not to mention, the sprawling development projects in North Jersey (right across the river from the west side of Manhattan) and Brooklyn.

Commercial Real Estate

Similar to what is happening in the residential real estate market in New York City, commercial real estate is also under fire. In the case of commercial real estate, because of more jobs moving online and more supply of commercial real estate coming in, supply is high, but there is not enough demand to fill in that entire supply. The Real Deal, the premier luxury real estate market news site, reports that SL Green Realty (NYSE: SLG) CEO shares this same outlook by addressing that "lower job gains are coming off of blistering levels, and the market continues to be robust," signaling the high supply and decreasing demand. So, if you're looking to rent real estate in New York City, now is the time to do it.