Real Estate Market

By Steven Spinola

President, The Real Estate Board of New York





A little more than three months into 2005, the New York City real estate industry is experiencing strong, steady growth. We have seen last year's surging market continue to grow, as the pace of commercial transactions increases and the residential market keeps breaking records.

Mayor Michael Bloomberg's aggressive, five-borough economic development plan has been progressing rapidly and has provided a powerful impetus to the improvement in market conditions here in the Big Apple. In January, for example, officials approved the rezoning of Manhattan's Far West Side, the largest such planning effort in city history. And there is much more encouraging news to report.

All in all, New York City real estate is a good place to be right now.

As this year's Commercial Property News special focus on New York City clearly shows, our city is in the midst of a dynamic market. This section highlights the growth of investment in New York real estate, promising developments in the commercial, multi-family and retail sectors?and redevelopment progress citywide.

Commercial transactions have been on the rise. Investors, many from overseas, keep showing strong interest in New York City properties. In addition to buying and selling property, our members are also developing. There is now 10.8 million square feet of office space under construction. Remarkably, that figure is double the amount being built at this time last year.

Developments under construction include One Bryant Park, 7 World Trade Center, The New York Times Building and Hearst Tower, just to name some major projects. Developers also plan some 3.8 million additional square feet for new projects, including Goldman, Sachs & Co.'s new headquarters and 400 W. 33rd St.?each exceeding 1 million square feet..

In short, the pace of building new commercial space demonstrates ever-increasing levels of investor confidence in New York. It also shows that developers expect employers to keep creating jobs here. New office space will continue to serve as a powerful engine for economic growth.

In terms of economic development, last year in this section we looked at the city's ambitious plans for Downtown Brooklyn and the Far West Side of Manhattan. A year later, tremendous progress has been made in both areas.

In Brooklyn, the BAM Local Development Corporation and its BAM Cultural District have stimulated a neighborhood revival, complete with a new theater designed by Frank Gehry that will house a major theater group. Forest City Ratner's plans for Atlantic Terminal?with the Nets sports arena and thousands of new housing units?progresses every day. The Downtown Brooklyn rezoning plan, propelled by Mayor Bloomberg's leadership, has made such efforts possible. And the borough will benefit as the waterfront communities of Greenpoint and Williamsburg move toward rezoning for residential development.

REBNY has led the campaign to redevelop Manhattan's Far West Side. The rezoning will transform the neighborhood into a bustling, 24/7 community. This bold initiative is expected to generate an estimated 230,000 jobs and more than $60 billion in tax revenues over the next 30 years. As I write this, New Yorkers continue to debate whether the Jets will obtain the rights to build the New York Sports & Convention Center. REBNY is a vigorous supporter of this effort. We believe that the stadium is key to the city's economic growth and our bid for the 2012 Olympic Games.

Lower Manhattan is being transformed through the efforts of the real estate industry. In addition to numerous large commercial construction projects, new residential construction is under way. This area is emerging as an exciting live/work community. REBNY figures reveal that almost 8,000 new apartments are planned or under construction in the downtown market. As CPN readers know, new housing brings a demand for resident services. As plans for the Downtown rail link proceed as well, Lower Manhattan may take shape as a full-blown, 24/7 community sooner than many had anticipated.

To facilitate the process of finding space for potential tenants, REBNY launched the Commercial Listing Exchange on Jan. 19. This innovative resource enhances the way commercial brokerage firms and major property owners gather information about exclusive listings. For the first time, firms can share exclusive listings electronically every week. Within its brief existence, the exchange is already having a noteworthy impact on the city's commercial sector. We started with a handful of charter members, and today more than 18 firms tap the exchange to share exclusive listings.

On the residential front, REBNY's analysis shows that the average price for Manhattan apartments continues to grow. Moreover, the median price for cooperatives and condominiums?considered a more accurate indicator of market price trends?has reached the $1 million mark in several Manhattan neighborhoods. Spurred by favorable interest rates and enouraging job creation figures, we anticipate a continued boom in residential housing. Areas throughout Manhattan ? especially neighborhoods like Northern Manhattan?will continue to see an influx of homebuyers.

On the retail side, preliminary figures compiled for REBNY's spring retail report demonstrate that asking rents are still strong. We are encouraged to report that retail has now fully recovered from the decline set in motion on Sept. 11, 2001. Indicators show that growth will be steady as prime retail spaces are snatched up.

A strengthened national economy?with increased job creation and relatively steady interest rates?is certain to accelerate this strong period of growth of the real estate industry. The coming pages provide added focus on the various sectors I have mentioned, and further substantiate the overall strength of New York's real estate market. After a long-fought recovery since Sept. 11, New York City sees continuing growth in the foreseeable future.