Are New York studio apartments really good investments for first-time buyers? Studios and one-bedrooms are on the rise again – especially in Manhattan and Brooklyn

Aug 5 , 2022

A flat at 200 East 59th Street, a newly completed New York skyscraper that offers upscale one-bedroom units, a recently booming segment of the city’s residential market. Photo: 200 East 59th Street

The Big Apple is the world’s second-most expensive housing market in 2022, behind only Hong Kong, with one-bed units up more than 26 per cent year on year

Brooklyn Point and Front & York in Brooklyn, and One Manhattan Square and 200 East 59th Street in Manhattan, are among the well-appointed new projects seeing high demand

At the start of this year, homebuyers desperate to get onto the property ladder in New York City scrambled to secure small flats.

In the world’s second-most expensive housing market – where in 2022 prime property values run to US$2,580 per sq ft, behind only Hong Kong’s US$4,530 per sq ft according to Savills – one-bedroom unit prices were up 26.2 per cent year on year.

Thankfully, for eager new buyers, the spike was short and sweet. Luxury New York brokerage Serhant, which reported the data in its first-quarter market report, finds activity has declined ever since.

The interior of Brooklyn Point. Photo: Evan Joseph

Garrett Derderian, director of market intelligence at Serhant, said that, after averaging US$1,130 per sq ft at the peak in March this year – the highest level since Q4 2020 – demand for smaller units has clearly softened.

“The number of one-bedroom trades in both Manhattan and Brooklyn has declined every month from March to May, with overall one-bedroom trades between both boroughs now down 7.5 per cent year on year,” he said.

Derderian puts the spike in sales in Q1 down to the reopening of businesses and attractions, with people out and about again.

With more people returning to in-person learning and work, one-bedroom units saw increased demand on par with pre-pandemic levels

Garrett Derderian, Serhant

“Throughout the pandemic, smaller units generally became less desirable as people began to re-evaluate their space needs, requiring additional areas to work or home school from, driving demand for larger units,” he said. “However, with more people returning to in-person learning and work, one-bedroom units saw increased demand on par with pre-pandemic levels.

“In Q2, we’ve seen the market normalise and then slow as inflation, rising mortgage rates, and global events and uncertainty rippled through the market.” He noted, though, that units of all sizes and at all price points have been impacted by these factors.