Trends, emerging neighborhoods and predictions: snapshot of Manhattan's real estate sales market.

There has been a complete change in the Manhattan real estate market in the last two years.

Condominium prices have skyrocketed up more than 20%. Due to low interest rates and investment appeal fueled by disgruntled stock market investors, condominiums have become a popular choice for those seeking to maximize their assets, thus creating a real demand.

What is perhaps most remarkable about today's market is that premium priced condos now transcend neighborhoods. This comes back to the notion that Manhattan has, in a sense, become one large neighborhood.

Former Mayor Guiliani was effective in cleaning up most of the City, and crime has reached a 30-year low, melding together neighborhoods that were previously isolated. Buyers rush to these new transitional neighborhoods because they feel they are getting in on the upswing of a market bound for rapid growth. The outcome is that areas that once could never sell homes for more than $500 per square foot are now commanding over $700.

As a result, the most viable real estate investment for developers has been the construction of luxury condominiums. For instance: a condo known as 57 Bond Street was built on the corner of Bowery and Bond Street, and the developer fetched prices north of $700 per square foot, in an area not formerly known for condos.

Another market surprise is 102 Fulton Street, on the border of the Seaport and the Financial District. Condos came on the market at $550 per square foot and the developers sold them rapidly. Recently they've reached prices upwards of $700 per square foot.

These trends have also lured owners of rental buildings into the condo conversion market. One such recent example is the Devon Condominium on 34th Street between Second and First Avenues. The owners converted a 206 unit rental building into condominiums while redesigning the lobby and the majority of the units to satisfy the taste of the most discerning luxury condominium buyer.

Within Devon's first month of opening in a traditionally prime rental neighborhood, Citi Habitats, Devon's exclusive sales and marketing agent, sold more than 20 apartments there, proof that there is an unprecedented demand for condominiums.

Recent statistics show that the two hottest residential neighborhoods right now for new construction or conversion of condos continue to be TriBeCa and Chelsea. While there are few lofts available in these popular areas, the need for luxury residences dictates that loft-style condominiums be created, spawning desirable new neighborhoods within these greater neighborhoods.

Recently, there has been a concentrated explosion of growth in an area known as TriBeCa North--some call it The Triangle Within the Triangle--which is geographically bound by Canal Street to the North and North Moore Street to the South. It extends West to the Hudson River and East to Varick Street. Condominium loft-style buildings like The Hubert, The Sugar Warehouse, The Atalanta, Cobblestone Lofts, and the nearby Ice House have all recently come on the market priced at $795 to $1,300 per square foot, and many have already sold out.

At the center of it all is TriBeCa's newest historic landmark building--48 Laight. Scheduled to break ground in September, the building was unanimously approved by the 12 member Landmark Preservation Committee, and has been praised by the group as a "modern classic" for its integrated use of traditional and modern materials, including limestone, manganese ironspot brick, and stainless steel. 48 Laight will have two and three bedroom loft-style residences and a spectacular penthouse, all with unprecedented light and airy views. Developers are able to build this type of product because prices are strong enough to sustain such top quality.

The Triangle Within the Triangle is so desirable in part due to a new esplanade being built to the West in Hudson River Park. Aside from the world class attractions within TriBeCa, the neighborhood is convenient to its sister SoHo, a mecca of retail, arts and entertainment. Also close by is NoLita, an ubercool enclave of boutiques and eateries.

Another budding neighborhood within a neighborhood is known as The Barney's District in Chelsea. This includes the area bordered by 17th and 20th Streets along Sixth, Seventh and Eighth Avenues. The Chelsea Mercantile, The Chelsea Quarter, Grand Chelsea, Chelsea 121, The Campiello Collection, and 9 West 20th Street are among the comparable condos and loft-style condo residences in the district.

Many of those Barney's District buildings have completely sold out with the exception of the penthouses. When developers initially designed the condos, there was a robust penthouse market that was expected to fetch $1,200 to $1,500 per square foot, while the rest of the units were listed at around $700.

Since then, the smaller units have actually been selling for up to $800 a square foot, and developers have felt resistance selling penthouses as great as 3,500 square feet for their intended selling price.

Overall, the current demand for single units priced over $2 million is weak, and more than 85% of the sales market volume citywide is priced in the $250,000 to $800,000 range. The reality is that although people are choosing real estate as a viable avenue for investment, most people still do not have the $600,000 to $700,000 in disposable cash needed to buy an apartment in the $2 million plus price range.

My prediction is that the sales market will experience a halt if and when interest rates go up.

However, it is possible that the market will forgo a halt and price correction altogether, if the economy comes roaring back before those interest rates increase dramatically.

If this happens, the New York real estate market will have effectively defied all economic principles and will have established a precedent never before seen, because it will have thrived and prospered through the pitfalls of a double dip recession.

At Citi Habitats, our sales business has more than doubled in the last two years; our agents are selling at least two apartments per day, evidence that the demand for sales is real. Even in the traditionally slower summer months, business has grown at a record-breaking pace.

My outlook for the near future of the real estate sales market is incredibly bright. I truly believe that New York has been tested and pushed to its maximum limits. Major events like 9/11, the loss of over 125,000 jobs, the correction of the rental market, a mayoral change, corporate scandals, the war in Iraq, have all greatly affected the New Yorkers, and still the real estate market stands strong.

ANDREW HEIBERGER, PRESIDENT, CITI HABITATS, INC.