FED Construction Report for NY 4-25-07

The commercial real estate market in metropolitan New York City remained robust in the first quarter. Manhattan office vacancy rates slipped to their lowest levels since 2001 and asking rents were up 20 to 30 percent from a year ago. In addition, the sales market for Manhattan office properties is described as exceptionally strong. Most suburban office markets tightened slightly in the first quarter: in Westchester and Fairfield Counties and on Long Island, vacancy rates edged down and rents rose roughly 5 percent from a year earlier; however, northern New Jersey's vacancy rate edged up above 17 percent, while rents rose 3 percent.

Housing markets continue to be mixed. New York State Realtors report that statewide sales activity in early 2007 has been moderately lower than a year earlier, while the median sales price was virtually unchanged. A northern New Jersey real estate contact notes that, while many high-end homes (over $1.5 million) have languished on the market, there are pockets of strength for more moderately priced homes. A contact in New Jersey's homebuilding industry notes that, while homes priced at under $300,000 have been selling well, the overall market remains soft; new home prices are reported to be down from a year ago, and cancellation rates are said to be high, particularly in active-adult (retirement) communities. Finally, Manhattan's co-op and condo market continued to show resilience in the first quarter: sales activity rose sharply, and the inventory of listings, though still fairly high, continued to decline. However, selling prices for apartments, which had risen moderately throughout 2006 were reported to be virtually unchanged from a year earlier.

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