For renters and would-be renters in New York City, 2007 will be–surprise!–another trying year.
A new report from investment brokerage Marcus & Millichap declares New York will have the lowest rental apartment vacancy rate in the nation (2.8 percent) by the end of the year, as well as the strongest growth in rents throughout the year.
These dual projections will keep New York, the report says, the tightest, priciest rental apartment market in the United States, ahead of No. 2 Orange County, Calif., and No. 3 Oakland. In fact, New York’s the only non-West market to make the report’s top 5.
Release on the report after the jump.
– Tom Acitelli
NEW YORK CITY APARTMENT MARKET
RANKS NO. 1 IN NATIONAL INDEX
NEW YORK, Jan. 16, 2007 – New York City gained four positions to claim the #1 spot in the 2007 National Apartment Index (NAI) compiled by Marcus & Millichap Real Estate Investment Brokerage Company. In spite of a minor uptick in vacancy forecast by year end, New York City is still expected to post the lowest overall vacancy rate and strongest rent growth in the nation. The wide affordability gap between owning and renting in New York will help to sustain strong renter demand in spite of above-average rent increases.
The firm’s NAI, which is a snapshot analysis that ranks 42 apartment markets based on a series of 12-month forward-looking supply and demand indicators, is featured in Marcus & Millichap’s 2007 National Apartment Report. The report states that, with the local economy growing at a healthy pace, rental demand in all boroughs of New York City will increase in 2007. On the development front, construction of new apartment units is projected to rise this year, led by a 50 percent increase in new supply in the borough of Manhattan.
“With a vacancy rate south of 3 percent, New York City will remain the tightest apartment market in the nation,” says Mitchell LaBar, a managing director of Marcus & Millichap and regional manager of the firm’s Manhattan office. “In this tight market, owners will have the leverage to aggressively raise rents.”
Following are some of the most significant aspects of the New York Apartment Research Report:
· Citywide, employers are expected to create 39,000 jobs in 2007, a 1.1 percent increase but down from 50,000 positions added last year.
· Vacancy is projected to increase 10 basis points to 2.8 percent.
· Asking rents are forecast to climb 6.5 percent to $2,719 per month in 2007, following a 6.4 percent jump last year.
· Developers will add approximately 3,200 rental units to New York City this year; 2,700 units are scheduled for delivery in the borough of Manhattan and another 500 units in Brooklyn.
· Last year, the median price of properties in the borough of Manhattan rose 19 percent to $200,000 per unit, and investors remain willing to accept initial returns ranging from 4.5 percent to 5.8 percent.
Orange County, Calif., which ranked #1 in last year’s NAI, dropped one position to #2. Oakland, Calif., jumped three spots to rank #3, while Las Vegas (#4) and San Diego (#5) round out the top five. Seattle (#7) and San Francisco (#8) made the strongest gains in this year’s index, each climbing eight spots.
For a copy of Marcus & Millichap’s National Apartment Report and the complete NAI rankings, visit www.MarcusMillichap.com.