RE investors pounce on Harlem.

Despite a slight increase in mortgage interest rates and a worsening unemployment rate, the real estate market in New York is still strong, especially in the downtown and uptown areas. Harlem properties in particular are being bought and sold at a record rate, according to several brokerage firms based in the area. The purchasing of land by Columbia University, for the purpose of expanding their campus, has drawn a lot of media attention, and in the process created even more demand for real estate in the area.

"I don't have a crystal ball, but 10 years ago I knew to invest in Harlem," said Luca Capin, founder and president of New York-based brokerage firm Capin & Associates. "The big boys, the institutions, the investors all know it now."

Capin has closed over 500 real estate deals in Harlem in the last five years. Himself a Turkish-American immigrant, Capin was drawn to the area in the 1990s, due to its history, as a place for immigrants and African-Americans, particularly those in the theatrical profession. He especially favors the Sugar Hill area, between 135th to 145th Streets, east of Amsterdam, which used to be home to many famous African-American actors and actresses, as well as European Jews.

Capin says it's "no question" that Harlem will become the new downtown. "It's a sleeping lion," he said. "Huge things are going to happen. They're already happening. Prices are showing that. People are showing that."

"Investing in Harlem property is a very good idea," said Steven Spinola, president of the Real Estate Board of New York. "The significant development in housing and retail should give off very good signals that the future of Harlem will be very positive. At some point, things may cool down a little, because the market is cooling a little, but in the long-term, we'll continue to see improvement. This is a tremendous opportunity for people to live in Manhattan at more reasonable prices than other areas in Manhattan."

Of course, Harlem wasn't always this hot to investors. Back in 1995, Capin said he literally had to beg the potential landlords to buy a building on 165th Street, which had already been on the market for nine months. However, after convincing his clients to take a second look at the building, and begging some more, Capin sold it for $980,000, three-times the rent roll. Today, the building's ground floor is occupied by the Presbyterian Hospital, who recently spent $1.5 million on renovations for the basement alone.

"Now they thank me," said Capin, of the owners, brothers Aaron and David Steinberg.

The Steinberg brothers were hardly the only ones wary of investing in Harlem in the 1990s. Drugs and crime had long-since destroyed Harlem's reputation as a posh place for immigrants and artists.

"The drugs unfortunately brought the neighborhood down," said Capin, "but former Mayor Giuliani did a great job of cleaning up the city. As soon as the drugs got cleaned up, I saw the change happening."

Another obstacle for Harlem residents and business owners throughout the past 50 years was "red-lining," according to Steven Barshov, an attorney who also conducts historical tours through New York, with the Metro Zone program. In the 1960s and 1970s, when the streets were full of racial tension and rioting, insurance companies weren't providing insurance coverage or financing to individuals and businesses in lower-income areas at competitive rates, or in some cases, at all. Eventually Congress passed a law that forced financial institutions not to discriminate, but before that happened, a mass emigration of Harlem residents to the suburbs and other parts of the city, virtually turned upper Manhattan into a ghost town.

"There was block after block of shells of houses that were abandoned," said Barshov. "Eventually they became city-owned because people weren't paying their taxes and now the city is trying to make that space available again. This time the banks are lending money, because they realize they can make a buck."

Within the past few years, rent prices in the area have risen "dramatically," although for-sale housing hasn't had the same demand, according to real estate developer and attorney Jerry Migdal, of Migdal Realty.

"Harlem doesn't yet have the buying power of other parts of town," said Migdal, who owns and manages 20 buildings in Harlem. "But the rental market is very strong, because when you fix up a place, improve it and maintain it, it creates demand."

However, according to Barshov, there must also be a strong ownership market to make Harlem thrive as a long-term prominent place to live and do business.

"If the demand is matched by an increasing amount of quality housing, you're going to see an increasing amount of ownership," he said. "One of the problems Harlem has always had was a low percentage of home ownership. Renters tend to be more transient. That, along with a lot of absentee landlords and business owners who didn't live in the area, meant that every dollar that came into the community, went out just as quickly. But now a lot of the new projects like the condos and commercial development will provide a more solid economic base."

Along with increased high-quality housing, other factors, such as the nearby Hudson River and Central Park, not to mention the rent, still relatively cheap by New York standards are making the area more attractive to potential residents. However, in order to keep Harlem a desirable place to live, in the long-term, landlords must maintain their properties, while also preserving their original design and architecture, advised Migdal.

"The buildings that went up in the 1920s are magnificent and grandiose," he said, "but they're neglected. Irresponsible people came here looking to buy properties just for the cash flow, but it takes people committed to long-term development. You have to buy, hold and improve on things like electricity and the boilers, and keep the original details intact but restored."

Migdal said he also rejects the idea of "gentrification" of Harlem, and that that won't be the answer to keeping Harlem's real estate market strong. He also doesn't believe the construction of Columbia University's facilities will change the character or population of Harlem too much, because current residents aren't getting displaced.

"You don't change the people," he said. "You want to improve it for the people here already, and now it's as safe here as anywhere else in the city, and that's why there'll be room for everyone."

Today there are less than 500 vacant buildings in Harlem, far less than the 3,000 that went unused five years ago, said Migdal, who predicts that in two years, there'll less than 100.

"People are saying that this is a second Harlem Renaissance," said Barshov.

Other changes being made are to the actual names of the neighborhoods, adding to the idea of a second Harlem Renaissance. West Harlem is now being referred to as "Hamilton Heights." Meanwhile Columbia University has nicknamed the area between Morningside and West Harlem "Manhattanville."

"Psychologically, it changes people's minds about Harlem," said Capin. "History repeats itself, as today's numbers are showing, Harlem was once a great place, built for people who came here during the recession. The buildings built in the 1940s in Washington Heights and Harlem, I am in love with them. My wife said I have a romance going with them, but they were built for immigrants like me."