MARKET SNAPSHOT: NYC Vacancy Rates Still Tight as High-Tech and Hospitality Companies Fuel Job Growth
New York—“High demand” and “shrinking vacancy rates” are the words that best describe the multifamily outlook for 2014 in the City that Never Sleeps. According to a recent market report by Marcus & Millichap, New York retains the top spot in the NAI Rank this year thanks to a considerable growth of the city’s technology industry that is expected to offset job losses in the finance sector and support absorption at the top end of the market.
With major technology companies such as Google, Microsoft, Apple, Twitter and Facebook continuing to expand their presence in the city along with numerous support firms and vendors such as eBay, the plethora of high-paying jobs translates into one of the lowest vacancy rates in the country despite an increase in completions. As for the lower-tier apartment demand, Marcus & Millichap predicts that this niche will be supported by the increased number of visitors, both tourists and business travelers, which is creating plenty of jobs in the food services and hospitality industry, especially in Manhattan and Brooklyn.
As a consequence, employees in the tourism trade will continue to look for affordable housing options in outer boroughs or rent-controlled units in Manhattan. On the overall, employment is estimated to climb 2.8 percent in 2014 with the addition of 112,600 jobs, a 2.1 percent increase since 2013.
In terms of new construction, development companies are expected to complete as many as 8,800 rental units in 2014—as compared to 2013, when 7,000 units were delivered—with effective rents estimated to climb 2.6 percent and hit $4,014 per month, marking a 23 percent increase since 2010.
While the Big Apple is traditionally recognized as one of the country’s most expensive cities in terms of housing, the historically tight vacancy rates and lack of inventory have introduced local authorities and developers to the concept of “micro-housing.” As a result, the city’s first micro-apartment development called My Micro NY is currently under construction at East 27th Street and Mt. Carmel Place in Manhattan’s Kips Bay neighborhood. The project is being developed by a joint venture led by Monadnock Development LLC and includes 55 small-sized rental apartments measuring between 250 and 370 square feet.Tags: Marcus & Millichap, market report, vacancy rates