Skip to main content


Brexit and Rent Guidelines 0% Vote, What Does It All Mean?

2016 has turned out to be a year of mixed signals. Some promote new investments, and others expose future risks. U.S. hiring in the first half of this year drove total U.S. employment almost 6 million jobs above the pre-recession peak! New York City’s consistent job growth (90,000 new jobs this year) and apartment rental demand continue to be positive, but the year’s early stock market volatility tempered retail spending. Some banks have tightened credit standards. Globally, Britain’s surprise exit from the E.U. created economic uncertainty in Europe, but also caused treasury rates to hit their lowest level since 2012.  This translates into continued low interest rates for some time!  

Locally, underscoring the biggest risk in our market today — the political environment — the rent guidelines board voted again this year for a 0% increase on one-year renewals for rent stabilized apartments. So, while there is upheaval in far away lands, some of the biggest dangers lie in our own backyard. 

An International Impact

When you talk about risks, it’s all relative. New York has become the ultimate safe haven for global capital, and we exist in a market where a little bad news may actually be good.  Brexit will become a stabilizing force in real estate pricing.  The worldwide uncertainty in China, and now Europe, will continue capital flows into New York City.  As this pushes capital to safer investments, it provides support for pricing in hard assets, and particularly multifamily.

We have been, and continue to be, in a period of extended low interest rates with a very slow, but steadily improving economy.  Many investors believe the current market is right for buying.  That said, buyers scrutinize rental growth (especially in primary markets) now more than ever. How much rental growth is left?  Will a tenant require a concession on renewal? Upside is no longer taken for granted and the rental landscape has become more nuanced. In secondary and tertiary markets, assets continue to trade at very fast paces, as investors gobble up any opportunity with a “value-add” component.  

I wish you a great rest of your summer and hope we can assist you in making rewarding financial and investment decisions.