Manhattan apartment vacancy is expected to dip below 2%

Real Estate Weekly,  June 27, 2007  

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An increase in rental demand generated by a strong local economy will result in lower vacancy and much higher rents in Manhattan this year, according to a first-quarter Apartment Research Report by Marcus & Milliehap Real Estate Investment Services.

The vacancy rate is expected to below 2 percent by the end of 2007, the lowest year-ending reading since 2000, when vacancy hit 1.2 percent.

"All of the borough's submarkets continue to perform well, though momentum-oriented investors seem to be focusing more on assets downtown these days," states Edward Jordan, regional manager of Marcus & Millichap's Manhattan office. "However, buyers that fail to consider investment options in other submarkets could be passing up solid opportunities to put money into assets that continue to appreciate at a significant pace."

Among the most significant aspects of the Manhattan Apartment Research Report, is was noted that one year after employers created 29,500 positions, job growth will increase to 41,500 new hires in 2007, a 1.8% increase.

Approximately 2,000 rental units are slated to come online in Manhattan this year, compared with 1,040 units in 2006.

Renter demand generated by a strong local economy will offset an increase in construction, yielding a 20 basis point decline in the vacancy rate to a scant 1.9% this year.

Strong demand will support a 7% rise in asking rents in Manhattan to $3,673 per month, and a 7.2 percent increase in effective rents to $3,575 per month.

Driven by robust fundamentals and difficulties in ground-up development investors' appetite in Manhattan will remain intense.

COPYRIGHT 2007 Hagedorn Publication
COPYRIGHT 2008 Gale, Cengage Learning