Commercial broker confidence has returned. REBNY's Real Estate Broker Confidence Index hit 52.5 for expectations in the second quarter, a new record. When measuring current conditions, the survey reported a score of 20.8, falling slightly below the prior peak in the first quarter 2021.
Brokers in the survey stated that real estate related market issues were among the top concern with 22.8% of brokers making the claim. Real estate market issues include challenges arranging financing and buyer resistance to broker fees to improved market conditions, tightening inventory and favorable pricing for buyers and tenants. Commercial brokers also noted concern over office workplace strategy, but expected that return to office will fuel activity in the general market.
Local elections and government was another top concern of commercial brokers. More than a quarter of brokers said that current mayoral elections will impact leasing regulations and tenant support that will inform the apartment market.
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COVID-19 actually fell low on the list. Only 12.3% of commercial brokers reported concerns over the pandemic. That is a dramatic decrease from the 40.2% of commercial brokers that cited concerns over the virus in the same survey last year. The confidence is centered on vaccine distribution and the slow re-opening of the economy. However, the Delta variant could derail the progress, according to the survey. Some brokers expressed concern that the economy could open up too quickly amid new surges, and that could lead to another shutdown.
Much of the market confidence hinges on the return to office. The survey said, "NYC, companies must reopen and bring employees back into the office, not only for the CRE industry but also for the lifeblood of the city and the safety of its citizens." The return to office will help drive recovery in retail, particularly in Manhattan office districts like Grand Central and Midtown East. Brokers expect major investment banks, law and real estate firms to drive the return to office trend.
Office leasing is already picking up. In the second quarter, leasing totaled 3.47 million square feet in the second quarter, a 20% quarter-over-quarter gain. However, leasing activity still fell a significant 44% below the five-year average of 6.14 square feet, according to research from CBRE.
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Kelsi Maree Borland
