NYC commercial markets stabilized

Real Estate Weekly, March 20, 2002 by Parke Chapman

New York City's commercial real estate market has stabilized, says a report from the Federal Reserve Beige Book. Issued six times a year, the Beige Book report is an anecdotal compilation of economic data from each Federal Reserve district.

Among the report's findings were that vacancy rates in Lower Manhattan continued to climb during January as rates in Midtown actually declined. Asking rents were slightly higher at the beginning of this year than in early 2001, and landlords are now offering more concessions. But sales transactions are described in the report as "fairly strong" throughout the metropolitan area.

"This is a very positive report. To be talking about a turnaround only six months after Sept. 11 is remarkable," said Ken McCarthy, chief economist at the Economic Intelligence Company.

He added that unemployment should continue to drop as the economy gains momentum.

The residential market continues to gain momentum, according to the report. The co-op and condo market reported a substantial pickup during January and February. Apartment sales activity has been brisk in recent weeks, as sale prices have rose modestly from a year ago.

Hiring activity also rose in the first two months of this year. The industry bringing in the most new hires is apparently the legal industry. A "smattering" of small firms in creative fields--public relations, advertising and the film business--have picked up some jobs.

Manhattan hotels report that occupancy declined at the seasonal rate for January, ending the month at 78%. That represents a 4% decline from 2001.

Room rates were down 15% on average, versus a 25% decline during, the fourth quarter of 2001. Hotels fared relatively well in February, buoyed by the World Economic Forum.