Manhattan Real Estate: Is There Anything Left?
Wednesday, March 5th, 2008Today, it is a victim of its own success. After Manhattan was wrecked by recession and crime in early 90’s, a steep rise in its local economy set the clock ticking for the real estate boom. But the Manhattan housing and office market boom is over. The Fizz has ultimately left the bottle.
But what went wrong, do we know? Figures show that the office vacancy rates have started to drop and hit a low of 5.3% by the end of 2007, the lowest since early 2001. But don’t think that an average price rise of nearly $60 per square foot due to this growing demand for office spaces is a trend that’s going to stay.
History tells us that this rise will soon plateau and then eventually start falling. A downturn in economy with since 2003, particularly with regard to job creation, has resulted in a fall for demand for office space leading to more space availability through sub-leasing. The office market has been creeping to its peak with rents so high as much as $150 a foot at places. But at the same time, the house market peak has already come and gone. Manhattan kept pace in its property rates with the rest of the country from the year 2004 till the mid 2006, but after that there the city witnessed a steep escalation in real estate sales activities. This led to erosion of the high inventory in the manhatten real estate market.