Surging apartment rents keep investment business brisk.An increase in rental demand generated by a strong local economy will result in lower vacancy and much higher rents in the Manhattan apartment market this year. The vacancy rate is expected to tick tick: see mite. tick Any of some 825 parasitic arachnid species (suborder Ixodida, order Parasitiformes), found worldwide. Adults may be slightly more than an inch (30 mm) long, but most species are much smaller. to less than 2% by year-end, the lowest year-end reading since 2000, when vacancy hit 1.2%. Rent growth was accelerating as 2007 began, and rates will continue to post significant year-over-year gains through the first half of the year. On the supply side, deliveries will increase this year compared with 2006, but new units should be absorbed quickly, as there is always some level of pent-up demand for rentals in Manhattan. The pipeline is filling, however, particularly on the Far West Side. Additionally, new provisions in a popular tax incentive program for developers are slated to go into effect in 2008 and expand the number of areas in the city where such incentives can be used. Still, any buildup build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. in rental stock is likely to be gradual and will occur over several years, thereby mitigating mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. the effects of new supply on fundamentals at any given time. In the transaction market, deal flow has slowed a bit from last year, but remains brisk Brisk as a proper name may refer to:
adj. heart·i·er, heart·i·est 1. Expressed warmly, exuberantly, and unrestrainedly: a hearty welcome. 2. appetite for Manhattan apartment properties. All of the borough's submarkets continue to perform well, though momentum-oriented investors seem to be focusing more on assets downtown these days. As a result, investment activity seems to be shifting from Upper Manhattan Upper Manhattan denotes the more northerly region of the New York City Borough of Manhattan. Its southern boundary may be defined anywhere between 59th Street and 155th Street. to Lower Manhattan Lower Manhattan is the southernmost part of the island of Manhattan, the main island and center of business and government of the City of New York. Lower Manhattan is generally defined as the area delineated on the north by Chambers Street, on the west by the Hudson River (North . Buyers that follow the herd and thereby fail to consider investment options in Upper Manhattan, or any other submarket sub·mar·ket n. A geographic, economic, or specialized subdivision of a market. adj. Being below what is usual in a particular market: submarket wages; submarket interest rates. , could be passing up solid opportunities to put money into assets that continue to appreciate at a significant pace. Operating fundamentals will continue to improve as the year progresses, spurred on by solid job growth in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . Job growth will increase to 41,500 new hires in 2007, a 1.8% increase. Securities industry employment in Manhattan was up 4,500 positions year-over-year during the most recent 12-month period, a 2.6% increase. As a result of continued gains in the economy and job market, builders are expected to complete 2,000 market-rate units in 2007, compared with approximately 1,100 units last year. More rental properties may enter the construction pipeline later in the year as more information regarding the 421-a tax incentive program becomes known. Additional construction would not necessarily harm the market, as renter demand will offset an increase in construction, yielding a 20 basis point decline in the vacancy rate to 1.9% this year. In the Morningside Heights submarket, which covers all of Manhattan north of 96th Street, leasing momentum continues to accelerate as vacancy is down 110 basis points year over year. Vacancy is expected to fall to the low-2% range this year, as strong service-industry employment supports renter demand. This strong demand will support a predicted 7% rise in asking rents in Manhattan to $3,673 per month, and a 7.2% increase in effective rents to $3,575 per month. Further bolstering the apartment market is Manhattan's extremely low housing affordability. The median household income The median household income is commonly used to provide data about geographic areas and divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more. of $59,000 per year covers only 21% of the regular monthly payments required to own a condo in the borough. The median price of a condo in the borough of Manhattan is roughly $1.1 million, 11.3% more than one year ago. Record bonuses on Wall Street will stimulate condo purchases at the high end of the market, but for most residents, Manhattan remains a renter's market, as 71% of households occupy rental residences. Manhattan's apartment market remains one of the strongest in the country. While developers plan to deliver 2,000 new market-rate units by year's end, renter demand will keep vacancy extremely low: below 2%. Driven by robust fundamentals and difficulties in ground-up development, investors' appetite for assets in Manhattan will remain intense throughout the year and well into 2008. EDWARD JORDAN Edward Jordan was typical of the violent but short-lived pirates of his time. An Irish rebel, in 1809, desperate to avoid debts, he slaughtered the crew of a merchant who came to seize his ship but was captured a few weeks later. , MANHATTAN REGIONAL MANAGER, MARCUS & MILLICHAP |
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