Second District Report On NY Commercial Real Estate
Second District--New York Construction and Real Estate: The region's housing market was mixed but, on balance, softer in early 2006. New Jersey homebuilders report a growing inventory of homes at the higher end of the market. The number of transactions has been well below comparable 2005 levels, selling prices have been basically flat since last autumn, and builders are offering more concessions. However, an industry contact notes one exception: redevelopment in older urban areas, a growing segment of the market, has met with persistently strong demand. Albany area Realtors report that sales fell 13 percent from a year earlier in January, while selling prices were up 10 percent. Similarly, sales of Manhattan co-ops and condos are reported to be down 10 to 15 percent from a year earlier in January and February, despite strong demand for high-end apartments and townhouses reportedly driven by strong bonus payouts on Wall Street. Overall, real estate contacts report that the inventory of unsold apartments has grown and that prices have leveled off, though they remain more than 10 percent ahead of a year ago. In contrast, Manhattan's rental market has shown persistent strength, with rents rising steadily but moderately.
Commercial real estate markets across the New York City metropolitan area were generally stronger in early 2006. Manhattan's market continued to strengthen in February, according to a major brokerage firm, largely buoyed by strong leasing activity from financial, legal and media firms, with a large number of small leasing deals noted in Lower Manhattan. Suburban office markets were mixed, however, with vacancy rates edging down in northern New Jersey, but rising in Long Island, Westchester and southwestern Connecticut. Industrial markets were stronger across the metropolitan area, as vacancy rates were steady to lower and asking rents continued to climb. Long Island's market has been particularly tight, with an industrial vacancy rate below 5 percent.
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