NYC might once again be the hub of a major correction in 2022. That could also produce great and much desired inventory opportunities. Could there be anywhere better for investors to focus their acquisition efforts this year though?
Manhattan Gets Hit Hard
Manhattan has probably been hit harder than anywhere else on the planet from COVID. At least financially and in terms of real estate and its reputation.
In performance it has been horrifically lagging even the most rural, class C and D in the country, in no name stretches of countryside.
After several false starts major companies have decided going back to the office was a bad idea. That leaves around half a billion square feet of once ultra prime office space unneeded. That doesn’t count all of the retail space in Manhattan. Then there are all the high end restaurants and other businesses that were there to support these buildings and workers.
A major evacuation, carrying a lot of flight capital, has been underway.
Even before the pandemic NYC had many empty new condos. After the first couple waves of lockdowns, landlords lured some back with crazy cheap rental deals. Now those tenants are being hit with 70% or more rent renewal rates.
Then you have 1 in 60 people in Manhattan testing positive for COVID as of December, at the start of a surge of the latest coronavirus variant. Crime has been rocketing, but COVID related restrictions are far more damaging. For half the country and much of the world, NYC has become a no go zone.
Turning Distress Into Success
Some believe in the long term appeal and value on NYC real estate. It has happened before, even after global pandemics. Of course, not everyone will have the financial capacity and stomach for the risk, watching investments bottom out in value, maybe years without income, and waiting for the rise. All while suffering miserable returns. There certainly could be great select deals on properties and loans. It’s all about the discount you get.
Yet, there may be better opportunities for superior investment performance.
Is NJ Better?
Well before the pandemic, NJ began to become more desirable and trendier than NY. Famous NY athletes have been choosing NJ to buy luxury homes in, since at least 2018. More recently celebrities like Cardi B. have announced they have new homes in NJ.
It’s a far more stable market, with far more growth potential, and sustainable returns for buy and hold real estate and mortgage note investors.
How will you restructure your portfolio and invest this year?
Find out more about investing in secured debt and real estate, go to NNG Capital Fund