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REBNY Broker Confidence Index Increased Slightly in 3Q17
December 1, 2017
Quarterly survey observes uptick in overall market sentiment despite growing residential market concerns
New York City real estate brokers are encouraged by current and expected commercial leasing market conditions, but have continued concerns about the residential rental market, according to the Real Estate Board of New York’s (REBNY) Broker Confidence Index. The Real Estate Broker Confidence Index, which measures broker confidence in the New York City real estate market, increased slightly to 6.00 in the third quarter of 2017, an increase of 0.11 from last quarter. Improved confidence in residential financing and commercial leasing drove this increase in overall market confidence.
“Our Broker Confidence Index reflects cautious optimism among REBNY brokers who closely monitor economic indicators that impact commercial and residential transactions across New York City’s real estate market,” said John Banks, REBNY President. “Residential brokers expressed confidence in their ability to reconcile buyers’ and sellers’ price expectations, and commercial brokers are hopeful about opportunities in the leasing market.”
The Commercial Broker Confidence Index was 6.27 in the third quarter of 2017, an increase of 0.43 from the previous quarter, while the Commercial Broker Future Confidence Index increased 0.66 quarter-over-quarter to 5.94. Commercial brokers’ responses were more positive to survey questions about the overall market, current and future financing, and current leasing conditions than in the previous quarter.
In the survey’s open-ended response section, one commercial broker said, “I believe the underlying market is solid, but the way we do business is changing which creates confusion and opportunity.”
In their responses to our survey, REBNY Commercial Brokers expectations accurately forecasted the results of last week’s Manhattan Retail Report which showed rents declining in 13 of 17 retail corridors.
“Retail rents remain too high and demand is soft,” one broker said.
Another broker shared, “retail vacancy is driving down market and retail owner confidence”
“Retail rental rates need to come down to attract tenants,” said another broker.
The Residential Broker Confidence Index was 5.74, down 0.2 since the second quarter of 2017. Similarly, the Residential Broker Future Confidence Index, which measures broker’s market outlook for six months forward, decreased 0.09 quarter-over-quarter to 5.76.
Much of the residential brokers’ chagrin is traced to the rental market. Sentiment in this segment has slowly declined since 2014 leaving the measures of current and future rental market conditions at all-time lows of 2.24 and 2.86 respectively.