New York s Real Estate Market A Decade After 9/11

Transcription

1 New York s Real Estate Market A Decade After 9/11 1

2 New York s Real Estate Market A Decade After 9/11 Table of Contents Introduction Office Market l Asking Rents l Vacancy Rates l New Development Residential Market l New Development l Sales Information Retail & Tourism Introduction The deadly and destructive attacks on 9/11/01 challenged the survival of our city as the financial capital of our country and the world. Though New Yorkers displayed remarkable resilience, and the outpouring of support from across the country and around the world was unprecedented, the question remained to be answered: Would New York City recover? Ten years later, New York City s economy is strong and its real estate market is robust. This report looks at New York City s real estate market today and sees how it compares to the market of a decade ago. Labor Market & Demographics Real Estate Taxes & City Budget New York City Today Cover Photo: World Trade Center 2011 Joe Woolhead Mary Ann Tighe REBNY Chairman Steven Spinola REBNY President 1

3 Office Market New Office Development With the commercial office development underway at the World Trade Center and the office development planned at Hudson Yards, New York will provide 21st century space to accommodate the expansion of the city s major employers. We have built 22 new office buildings, including two in Lower Manhattan on the perimeter of the World Trade Center site. Office Rents Average asking rents are back on the rise after having endured the stunning recession that gripped New York and the nation in Average rents peaked during the summer of 2008 at $99.22/sf in Midtown, $62.27/sf in Lower Manhattan, and $88.37/sf in Manhattan overall. Right after the attack in 2001 these rents were $61.28/sf, $42.48/sf, and $54.68/sf, respectively. New development since September 11th has added 20.4 million square feet. Class A Asking Rents & Vacancy Rates, Class A Asking Rent Class A Vacancy Rate Manhattan Midtown Downtown New Manhattan Office Development Year Location Project Developer sqft 2001 Midtown 383 Madison Avenue BearStearns 1,200, Midtown 3 Times Square Rudin Management 865, Midtown 360 Madison Avenue Kipp-Stawski 345, Midtown 5 Times Square Boston Properties (Ernst & Young) 1,100, Midtown Rockefeller Plaza West Lehman Brothers 1,036, Midtown 222 East 41st Street Tishman Speyer Properties 365, Midtown 1745 Broadway Related Companies (Bertelsmann) 850, Midtown Madison Avenue Brookfield Properties 1,200, Midtown Times Square Tower Boston Properties 1,100, Midtown 10 Columbus Circle (Time Warner Center) TimeWarner/Related Companies 637, Midtown 731 Lexington Avenue (Bloomberg Tower) Vornado Realty Trust 1,300, Midtown 610 Broadway Macklowe Properties 110, Downtown 250 Greenwich Street (7 WTC) Silverstein Properties 1,700, Midtown Hearst Tower (959 8th Avenue) Tishman Speyer Properties 856, Midtown 505 Fifth Avenue Kipp-Stawski Management Group 275, Midtown 620 Eighth Avenue (8 Times Square) Forest City Ratner/The New York Times Co. 1,600, Midtown South Eleventh Avenue InterActiveCorp/The Georgetown Co. 147, Midtown 1 Bryant Park (Bank of America Tower) Durst Organization/Bank of America 2,200, Downtown 200 West Street (Battery Park City Site 26) Battery Park City Authority/Goldman Sachs 2,152, Midtown South 160 Fifth Avenue 160 Fifth Owner LLC 126, Midtown 11 Times Square SJP Properties 972, Midtown 510 Madison Avenue Macklowe Properties 292,663 Sources: Cassidy Turley, REBNY Market Report 2

4 Residential Market The 9/11 attack paralyzed the developing residential market downtown in 2001 and sent shock waves of uncertainty to the Manhattan rental, condo and coop markets. Aided by residential incentive programs advocated by REBNY and City and State government officials, the market quickly recovered. Since 9/11/01, the residential market has soared, but has slowed in the last few years as a result of the recession. Residential & Commercial Incentive Programs Highlights l Residents inside the immediate vicinity of the WTC site were eligible for a grant of up to $12,000 over two years l Residents outside the immediate vicinity were eligible for a grant of up to $6,000 over two years l Businesses of 200 employees or less were eligible for a per-employee tax credit of up to $2,400 per year for two years l Federal government authorized the issuance of $8 billion of private activity funds for new construction and rehabilitation for commercial and residential projects Market Facts From 2000 to 2010 there has been an 11% increase in the total amount of housing inventory citywide to 3,190,000 units. In the last decade, an average of 20,220 units were built per year in New York, a 145% increase from the decade before. The total number of rental units in 2010 rose to 2.14 million which was a 10% increase from about 1.95 million in The 95,232 condo units in 2010 was an 88% increase from the 50,671 condo units in In 2008, 33,911 housing unit permits were issued, the highest total in the last four decades. Sources: New York City Rent Guidelines Board, REBNY Market Report 3

5 Residential Market Rental Prices The rental market continued to strengthen throughout the last decade. Lower Manhattan had especially strong growth following the events of September 11th, as downtown became a destination for families and young people alike. Sales Prices The Manhattan Coop/Condo average sales price in 2010 was $1,457,255, which was an 87% increase from the 2001 average sales price of $778,575. Average Rent By Apartment Type, Mid 2011 (Percentage increase 2001 to 2011) Type Manhattan Lower Manhattan Studios $2,369 (18.9%) $2,789 (42.6%) One Bedrooms Two Bedrooms $2,996 (12.1%) $3,377 (42.2%) $4,813 (18.6%) $5,205 (41.1%) Highest Average Coop Price (2010) l Greenwich Village: $2,812,713 l Midtown East/Turtle Bay: $2,152,095 l Lincoln Center: $2,029,135 Largest Increase in Sales Price ( ) Inwood Average Rent Studios Manhattan Lower Manhattan (Below Canal St.) l Greenwich Village: 245% l Battery Park City: 213% l Union Square/Gramercy/ Kips Bay/ Murray Hill: 166% l Inwood: 154% l Upper West Side: 124% Upper West Side One Bedrooms Two Bedrooms Battery Park City Union Square/ Gramercy/ Kip s Bay/ Murray Hill Greenwich Village Legend Percentage Price Increase 1-25% 26-50% 51-75% % % % % % % % Source: Nancy Packes, Inc. Signature Marketing Source: The Douglas Elliman Report, Manhattan

6 Tourism & Retail Market NYC Visitors & Spending Since September 11th, NYC has continued to see an increase in visitors each year. In tandem, the retail market has grown and rents along the main retail corridors have risen. In 2010, tourism hit an all time high, with 48.8 million total visitors. Visitor Spending in Billions Foreign Visitors to NYC (right axis) Domestic Visitors (right axis) Total Visitors (right axis) l Domestic Tourists: 39.1 million International Tourists: 9.7 million l Tourists spent $31.5 billion this year in New York City. Retail Rents Per Square Foot Retail rents continue to increase with significant percentage increases since Asking rents and percentage increases in 2010 from 2001 East Side: Midtown: West Side: Manhattan: Midtown South: Downtown: Upper Manhattan: $173/sf, up 43.2% $142/sf, up 24.0% $128/sf, up 39.1% $116/sf, up 26.9% $101/sf, up 36.5% $100/sf, up 66.7% $ 64/sf, up 41.1% Manhattan Average East Side Average West Side Average Midtown Average Average Hotel Occupancy Midtown South Average Downtown Average Upper Manhattan Average Hotel occupancy rates and daily room rates are starting to recover from the 2008 recession. l Average hotel occupancy reached 85.4% in 2010, near the 2007 peak of 86.1%, compared to 73.4% in l Average room rates were $256 in 2010, compared to $204 in Average Hotel Occupancy Average Daily Room Rate Sources: NYCGo.com, REBNY Retail Report, NYCGo.com 5

7 Labor Market Job growth has been strong in the last ten years. Though we are down from the peak of 2008, we still have more jobs today than we had in September l There are 3,749,800 people employed in the city as of October 2010, a 3.59% increase since October l The private sector experienced a 4.44% increase in employment, with 3,199,400 employees. l Industries experiencing growth include Hotels/Accommodation, Education, Health Care and Retail. l Industries that have declined include Manufacturing, Information, Legal and Building Construction. l Government employment has decreased by about 1.08%, since Labor Market Snapshot Employed in NYC (thousands) Oct, 2001 Employed in NYC (thousands) Oct, 2010 All NYC Jobs (not seasonally adjusted - in thousands) Industry Sectors Increased: Hotels Education Health Care Retail Business Services Real Estate Declined: Financial Activities Building Construction Legal Information Manufacturing 33.20% 30.27% 17.57% 15.23% 4.53% 2.08% -3.11% -5.38% -6.47% % % Source: NYS Department of Labor 6

8 Demographics Our population has continued to grow, adding approximately 166,855 people in the last decade, according to the recent census. NYC remains the largest city in the nation, with 8,175,133 residents, an all-time high for our population. The Census also showed that NYC continues to be a destination for young people, with an 8% increase in the number of New Yorkers between 20 and 29 in the last 10 years. NYC Demographics, 2001 & 2010 NYC Population by Age NYC Demographics, 2010 Source: US Census Bureau 7

9 Real Estate Taxes & The City Budget Growth in the Real Property Tax levy has consistently outpaced the growth in Total Tax Revenues. l The Real Property Tax levy has increased 108% to $19.25 billion in the last decade. l The budget has increased 66% to $65.9 billion over the same period. l Real estate related taxes now comprise 48.10% of total NYC tax revenues. Local tax revenue continues to grow. In the last decade, New York City real estate taxes have been the foundation of the city s budget, with the levy growing 108% since At the same time the city budget has grown by 66%. The Real Property Tax levy has grown to 26.7% of the City's total budget, from 22%. In 2011, real estate-related taxes (real property, commercial rent, transfer, mortgage, recording, and hotel occupancy) have grown to 48% of the City's total tax revenue up from 45.6% in In general, real estate taxes have been increasing as a share of the city s tax base. Income producing property constitutes 33% of the City total tax revenue. Fiscal Year 2011 Source: New York City Comptroller Report 8

10 New York City Today Today, New York City is thriving. Our population is growing and the city is adding new jobs. In response to the attacks, New York City has been a national leader in implementing more stringent building safety requirements. These include wider emergency exit stairs to make evacuations quicker, the installation of photoluminescent strips to make building evacuations safer and the full sprinklerization of office buildings to better safeguard property and protect lives. Our city s rapid economic recovery was the result of strong leadership at all levels of government (local, state and federal) and the resilience of all New Yorkers who were determined to come back from this unthinkable event stronger than ever. The efforts of REBNY and other organizations who did what was needed such as establishing a space bank to help relocate businesses displaced helped those that suffered in the days, weeks and months after 9/11/01, hastening our recovery. As we approach this tenth anniversary, we remember those we lost as a result of this heinous act, those that risked their lives responding to this unprecedented emergency and acknowledge the countless actions of many who made New York s recovery a reality. A report of the Real Estate Board of New York, August 2011 If you have any questions about the contents of this report, please contact the Research Department at