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Rental market stays strong in '98; looks to make more gains this year.

Although many industry veterans expected an end to the enormous growth cycle that residential real estate experienced in 1997, 1998 turned out to be another year of tremendous gains, especially in rentals. While the sales market took a slight hit in 1998, due mainly to the uncertainty on Wall Street, rentals continued to remain strong across the board. Citi Habitats once again leaped ahead of the competition, closing 4,046 rental transactions in 1998, beating its 1997 record of 3,568 transactions.

While most rentals experienced price increases in 1998 of 15 to 25 percent, in 1999 rental prices are expected to stabilize and level-off in some cases. The average rents in 1998 for high-end apartments increased to $1,800 for studios, $2,300 for one-bedrooms and $3,500 for two-bedrooms. Although these rents will remain lofty, price decreases in high-end properties are expected in the range of 5 to 10 percent. However, demand for moderate and low-to-moderate level rentals should remain high, with no price decreases expected.

On the sales side, the outlook for 1999 does not seem as promising. Many would-be buyers are holding off on purchasing an apartment, waiting to see what happens on Wall Street. In 1999, expect sale prices to drop by as much as 15 percent, as would-be buyers prove to be overly cautious. Of course, this means good news for the rental market, as would-be buyers continue to rent.

In 1998, developers new and old moved in and began building, renovating and converting everything in sight. Every neighborhood in Manhattan began to bear witness to this growth, watching residential buildings rise from empty lots. In 1999, many of these new residential projects will come on line, satiating the demand for rental housing.

Nowhere has this new construction been so prevalent as in the Financial District. This booming residential neighborhood, just under two years old, is now one of the hottest areas to live in for young professionals. The developers who recognized the demand and needs of these young professionals were the ones to capture the most dollars by building and converting buildings to offer a mix of studios and one-bedrooms. In 1998, approximately 1,300 units were brought online in the Financial District, and in 1999 we expect this number to increase.

Although some major brokerage firms continue to ignore the Financial District as a secondary residential neighborhood, Citi Habitats recognized the potential of the region. After serving as exclusive leasing agent for The Renaissance at 100 John Street, Citi Habitats opened the first and only full-service brokerage office in the Financial District. This new office, located on groundfloor retail space at 100 John Street, is expected to serve more than 6,000 clients per year.

Along with the new 100 John Street office, Citi Habitats also expanded its corporate divisions in 1998. In early summer, all corporate divisions were centralized under one roof at Citi Habitats' new headquarters at 30 East 33rd Street. During this time, Citi Habitats also expanded several key divisions, including public relations and marketing, construction consulting, website creation and corporate relocation.

With much forethought, Citi Habitats put all of the pieces into place in 1998, hoping to reap major benefits in 1999. This year alone, Citi Habitats plans to further set itself apart from the pack by leasing 5,000 apartments. With the rental climate continuing to hold steady in 1999, and by all accounts it will, this year will be another momentous time for Citi Habitats - propelling it into the 21st Century as Manhattan's largest single rental force.
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Title Annotation:residential real estate market
Author:Heiberger, Andrew
Publication:Real Estate Weekly
Article Type:Industry Overview
Date:Jan 27, 1999
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