The Impact COVID-19 Has Had on Commercial Real Estate in East Hampton NY

Commercial Real Estate East Hampton NY

The COVID-19 pandemic drastically altered the real estate landscape throughout the Hamptons, leaving a lasting impact that has seen scores of New Yorkers take permanent residence in the iconic getaway towns. Commercial real estate trends in the Hamptons followed suit, with dozens of retailers making the move that’s seemingly long term.

Nearly two years into the pandemic, the trend is showing no signs of slowing & the Hamptons real estate boom looks poised to continue into the new year.

Residential Housing Boom in the Hamptons

Since the onset of the COVID-19 pandemic in March 2020, the residential real estate market in the Hamptons has been rife with competition. Amid the shuttering of businesses and stay-at-home orders, many flocked to the Hamptons to take up temporary refuge from the throes of the pandemic. Consequently, home sales & rentals in the Hamptons soared with some homes renting for up to three times their original price.

As the pandemic dragged along, many opted to buy the homes outright rather than continue to pay the hefty summer rental price tags. Since, bidding wars for residential properties have reached unprecedented levels, with homes selling well over asking prices due to low inventory and a surge in demand.

Home sales in the Hamptons rose 48% in the first quarter of 2021 & the median sales price increased 31% to $1.3 million. All of this occurred while available inventory plunged by over 40%. With properties trading over the listing price, bidding wars occurred in nearly a quarter of sales.

Since then, the Hamptons have been made over into a bustling year-round community, transforming from the summer rental hotspot of former days. New houses in the area are selling before construction has been completed, which has never before been the case.

With work from home orders facilitating moves to the Hamptons and new residents enrolling their children in local public & private schools — in 2020, the Ross School in East Hampton had 101 new students enrolled, compared to 16 new students enrolled in 2019 — things don’t look to be changing any time soon.

Real Estate East Hampton NY

Impact on Commercial Real Estate in East Hampton NY

Much like it affected the residential housing market in the Hamptons, the COVID-19 pandemic had heavy implications for commercial real estate in East Hampton and the rest of Long Island. Although commercial real estate prices didn’t spike as early as residential prices given the uncertainty of what the global crisis might have in store for restaurants and retail businesses, they were quick to follow.

Shortly after the residential real estate boom in the Hamptons, the region saw an influx of businesses setting up shop permanently including fine art galleries Pace, Van de Weghe, Sotheby’s, Skarstedt & Michael Werner Gallery in East Hampton, who opted to relocate to the East End.

Before this point, commercial real estate in East Hampton mainly accommodated pop-up stores and temporary businesses. Now, the market is saturated with restaurants and retail businesses there to stay.

East Hampton’s newfound publicity from the exploding commercial real estate market also attracted buyers from outside New York City and Connecticut, expanding the pool of East Hampton buyers and driving up demand despite low inventory. Also driving up cost is the limited opportunity for development in the region, given the minimal land available.

With companies now realizing they don’t have to stay in the city to run their businesses, commercial real estate vacancies in East Hampton continue to be scarce, and bidding wars are plentiful, even continuing into the slower fall and winter months.

Commercial Real Estate Outlook in East Hampton NY

With the pandemic dragging its heels, it’s likely the residential and commercial real estate booms in the Hamptons will continue for at least another few years. Expect to continue seeing very few East Hampton vacancies into summer 2022.

That said, not all of the changes are likely to be permanent. The future of the East Hampton real estate market hinges on the outcomes of the global pandemic over the next few years, with the potential for the region to return to its natural state as a resort town when international travel reopens for good.

However, the mindset in the Hamptons is shifting & many are adopting the escape to the Hamptons as a lifestyle rather than a temporary vacation. With the pandemic’s timeline still uncertain and stay-at-home orders facilitating remote work, many are planning to stay in East Hampton for the time being, seeing it as a comfortable place to isolate safely for the foreseeable future.

As a result, the Hamptons will remain a coveted space in both residential and commercial real estate markets.