The New York/New Jersey regional economy continues its steady advance. Employment in New York State increased by 133,800 jobs (1.6 percent) between August 1997 and August 1998. During the same 12-month period, employment in New Jersey increased by 79,800, or 2.1 percent. New York State's unemployment rate was 5.3 percent in August 1998, a considerable decline from 6.4 percent in August 1997. New Jersey's unemployment rate was 4.8 percent in August 1998, down from 5 percent the previous year.
New York City employment gains between August 1997 and August 1998 totaled 87,000 jobs, a 2.6-percent increase. The city's unemployment rate was 7.5 percent in August 1998, down considerably from 9.4 percent a year earlier and now at its lowest level since 1990. The city's economy is heavily dependent on Wall Street, where the average salary is now $172,000. A recent report by the State comptroller disclosed that 56 percent of the real earnings growth of the city between 1992 and 1997 was generated by the boom on Wall Street, although this sector accounts for only 5 percent of the jobs. The global economic crisis has begun to have a significant effect on Wall Street. Merrill Lynch recently announced cuts of 3,400 jobs, 700 of which are in New York City, where 10,500 of the company's employees are located. It is likely that other firms will announce cutbacks in the coming weeks.
Single-family home building permit activity in New York State for the first 9 months of 1998 has been very strong, totaling 17,449 units, a 16-percent increase over 1997 volume for the same period. Multifamily permit activity in 1998 through September totaled 10,369 units, up 4 percent from the high volume in the same period in 1997. In New Jersey, single-family building permit activity totaled 18,086 homes during the first 9 months of 1998, up 6 percent from the same period in 1997. Multifamily permits were issued for 3,593 units, a 31-percent gain over the same period in 1997.
The New York State Association of REALTORS® reported that the annual rate of single-family home sales as of the second quarter of 1998 increased by nearly 14 percent statewide from the same period a year ago. The median sales price during the period was $138,620. The New Jersey Association of REALTORS® reported that the annual rate of home sales as of the second quarter of 1998 was up 18 percent from the same period in 1997. The median sales price of $162,800 was 5 percent above the same period in 1997. In New Jersey home prices increased the most in the Bergen and Passaic areas, by about 7 percent. The second-largest price increase was in Monmouth and Ocean Counties, where prices rose 6 percent.
The rental housing market in New York City remains strong. According to Yale Robbins Inc., a real estate information, publishing, and consulting firm, close to 3,800 apartment units in buildings of 100 units or more will be completed during 1998. Most of the activity is in Manhattan, and approximately 90 percent of the units are rentals. Manhattan's sales housing market, while still robust, is starting to show signs of being affected by the current economic crisis. According to the Corcoran Group, a real estate brokerage firm, more owners of units for sale in September had to reduce their asking prices than did those selling units in August.
In Westchester County, 1,708 homes were sold in the second quarter of 1998, a 17-percent increase over the same quarter last year and the highest number ever recorded for a second quarter. The demand for homes selling for more than $700,000 was particularly strong. Westchester County's inventory of single-family homes for sale at the end of the second quarter amounted to 3,900 houses, a level not seen since the 1950s.
In Queens, the median single-family sales price reached an all-time high of $175,000 in July 1998. The Nassau County median sales price of $195,300 was just under the all-time high of $197,000 recorded in March 1988.
Spotlight on Jersey City, New Jersey
The Jersey City metropolitan area (Hudson County) on the Hudson River opposite Manhattan began to rebound in the mid-1980s after a long decline. The population of Jersey City increased slightly, by 2.2 percent, during the 1980s, and has held steady since. The city had 229,000 residents as of July 1996.
After a downturn from 1989 to 1992, employment growth has been slow but steady. From 1993 through 1997, employment grew by 4.2 percent, despite a 13-percent decline in manufacturing jobs. The improvement has been due to a number of major real estate developments, State and Federal Government assistance, and strong local leadership.
A major strength of Jersey City's real estate development is its proximity to New York City's financial district. Areas of Jersey City served by PATH (Port Authority Transit Hudson), a major commuter link between Hudson County and downtown and midtown Manhattan, have experienced large-scale residential revitalization. At the same time, the Jersey City metropolitan area's economic mix has shifted significantly. As manufacturing employment declined, the services sector became the largest employer. The finance, insurance, and real estate sectors benefited from the addition of firms such as Merrill Lynch and First Chicago, which have established large back-office operations in Jersey City.
A growing services sector has tightened the market for office space. Extremely low vacancy rates are attributed to low rents. Two office buildings totaling 1 million square feet of space -- Colgate Center and 90 Hudson Street -- have begun construction in Jersey City. Two other properties totaling 1.1 million square feet -- Waterfront Corporate Center and 70 Hudson Street -- are in advanced preconstruction phases.
The Hudson River waterfront is a hot spot for hotel construction. Currently 10 hotels are in the planning or development stage along the 18-mile waterfront facing New York City. The first hotel to be completed on the waterfront in 7 years, the 199-room Club Hotel and Suites by Doubletree, recently opened in Jersey City. Three more hotels with a total of 600 rooms are scheduled to open before the end of the year.
The Jersey City rental housing market is tight. While newer developments 10 years old or less have a rental vacancy rates less than 2 percent, vacancy rates among older properties are somewhat higher, ranging from 3 to 5 percent. A large number of multifamily housing units, primarily rentals, are being developed. At the Newport development area, a 440-unit rental project was recently completed and is in rent-up, and construction has started on a second building with the same number of units. Near the Newport, the Avalon Cove II, a 220-unit tower, is close to completion. Also nearby, the Marbella and the Portofino, with a total of 560 units, are scheduled to begin construction soon. Contract rents for new rentals in the area near the waterfront begin at around $1,450 for a one-bedroom and $1,950 for a two-bedroom apartment. In nearby Hoboken, three projects with a total of 1,008 units are under construction with completion expected in early 2000.
The Jersey City area sales market is composed mostly of 2- to 4-unit structures. Multiple Listing Service data show no significant price change except in multifamily condominiums. In the 12 months ending in May 1998, the median sales price for condominium units, which are concentrated in Hoboken and Jersey City, increased 15 percent to $140,000.
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