Hurricane Sandy ravaged the eastern coastline a few weeks ago. It was the worst storm that New York has seen in decades. Homes were flooded, people were displaced, and even cranes snapped in two. The effect that Sandy had on real estate development was significant. Let’s look at some of the most hard hit areas and hidden opportunities.
One unexpected trend is that buyers are now asking more questions in regards to the zone that their building is in. In other words, they are weighing hurricanes into the equation of parks and schools. This line of thinking is new for Manhattan luxury properties, and also an opportunity for those sheltered from the elements.
Despite the lives lost and damage done, there was also a glimmer of hope after the Sandy hurricane disaster. City planners are now working with developers, builders and landscapers to help design a city that is more prepared for a storm of these proportions in the future. The Bloomberg administration has already spent approximately $150 million on cleanup costs after the storm. A large proportion of these funds were directed to the real estate and construction industries. Manhattan will be rebuilt, only better.
Another way that Sandy affected the Manhattan luxury properties was that sales ground to a halt, while rentals for short-term accommodations following the storm spiked to record highs. Closed sales of Manhattan property dropped from 238 per week to just 17 after the storm. The biggest factors of this was power failure and closings cancelled due to transportation shutdowns. Among the myriad of people involved in facilitating a deal, from the realtors, to the brokers, to the lawyers, buyers and sellers – it is not surprising that someone would be out of commission following the dangerous storm. As a result, the market froze for a short time. A total of 69 apartments in Zone A, the most vulnerable area in Manhattan, were pulled from the market as a temporary measure following the storm.
The dip in sales was only a postponement, however. Many realtors are now experiencing an increase of up to 60 percent as potential buyers are re-entering the market now that the storm has cleared. Pair this with a 250 percent increase in rental property inquiries after the storm, and the well-rounded realtor rebounded quite well in retrospect.
At the end of the day, buyers appreciate that Manhattan is not like the Caribbean. Hurricanes are not an annual event. They are a freak occurrence, an act of God. Smart investors will take the temporary lull and lessons learned and use it to their advantage (like focusing on non-Zone A buildings). Tentative investors will find themselves exactly where they were a few months ago: pining for property in one of the most secure and solid markets in the world.
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