Submarkets remain hotbeds of activity.

Manhattan's residential real estate market will see the addition of thousands of new units in third and fourth quarters of 2000, largely restricted to luxury conversions and high-end rental developments. Yet the tenant pool, increased by the return of families, young professionals and corporate relocations to Manhattan, requires mid-market space for which there is little supply. The result has been the transformation of peripheral neighborhoods such as the Meat Packing District, West Chelsea and the Lower East Side into "hotbeds" of mid-market leasing and sales activity.

With Uptown condominium units east of Third Avenue averaging $1,000 per-square-foot and units west of Third Avenue averaging $2,000 per-square-foot, owners and developers are beginning to focus their energy in under-developed neighborhoods. Following the pioneering example of dot-com businesses, buyers and renters are more willing than ever to cross traditional residential boundaries. And owners are more than willing to capitalize on the hip new addresses, where the off-beat location of newly repositioned units has proven to be their greatest marketing asset.

Perhaps the best indicator of the success of mid-market residential units in non-traditional submarkets is the speed these units leap off the market. Citi Habitats has witnessed an enormous amount of activity in the last six years in this sector, having rented or sold more than 20,000 apartments in that time. Recognition of the inherent value of buying or leasing in Manhattan has remained despite occasional stock market fluctuations. Economic stability has allowed the luxury market to grow by leaps and bounds while at the same time creating corresponding confidence in the mid-market sector.

The current market still has an enormous number of tenants seeking two-, three-, and four-bedroom units. One example of a property targeted to this group is Berkley Park, a new rental property on East 29th Street in the Kips Bay sub-market. Offering 120 apartments, each surrounded by a private garden, these apartments boast condominium-level finishes with oversized wraparound windows, set-back terraces and windowed kitchens. With prices beginning at $1,895 for studios and $2,475 for one-bedrooms, these mid-range residences have taken on a new identity as undiscovered gems in a sometimes overlooked neighborhood.

After the hard lessons learned by speculative developers in the mid to late eighties, many believe the current stock market turmoil is cause for caution. However, with thousands of units leaving the market each year due to attrition and an eager market of buyers and renters still lining up for each new project, most feel that Manhattan can absorb a significant number of additional projects in both traditional and emerging neighborhoods.