Lower Manhattan remains a preferred address for multiple kinds of business, as well as for New Yorkers seeking a place to live, according to a new analysis from the Downtown Alliance.
The Lower Manhattan Real Estate Market Report for the third quarter of this year shows that the FIRE sector (comprised of firms focused on Finance, Insurance and Real Estate) has relinquished its century-long dominance of the Downtown business landscape.
Occupying more than 55 percent of all office space south of Chambers Street as recently as 2009, the sector has contracted to just over 35 percent of commercial square footage, although it remains the single largest cohort in the area. The fastest-growing category appears to be the TAMI (Technology, Advertising, Media and Information) sector, which has jumped from just five percent of local office space to more than 15 percent in the same ten-year period. The other perennial mainstay of Downtown office occupancy, government offices, has grown from 14 percent to 20 percent of available space during the same interval.
“It’s amazing that Lower Manhattan has diversified its economy so rapidly in an expanding market,” says Downtown Alliance President Jessica Lappin. “This kind of shift is more often seen over several decades. But here in Lower Manhattan, we’ve witnessed significant growth in just ten years, and welcomed industries that never were here before. All of that is fueling the vibrant shopping and dining scene.” On the tourism front, the Alliance report says that 17.4 million people visited Lower Manhattan in 2017, an eight-percent jump from the previous year. This means that the rough equivalent of one out of every 18 people in America (or approximately 0.2 percent of the entire human population of the Earth) visited Downtown in the past 12 months. Given that the square mile of Manhattan below Chambers Street now hosts roughly the same number of annual visitors as the entire nation of the Netherlands and nearly as many as all of Canada, many Lower Manhattan residents may cast a sympathetic eye on efforts by European cities — such as Barcelona, Venice, Prague, and the Cinque Terre region of Italy — to restrict tourism.
All these visitors will not want for a place to lay their heads. The Alliance notes that 12 hotels, with 1,900 hotel rooms, are currently under construction or in the development pipeline. This means that total inventory is poised to jump by 27 percent in the next few years, bringing the overall number of rooms to more than 9,000 (in 45 hotels) by 2020.
For those planning to stay here permanently, Lower Manhattan’s tally of 33,000-plus apartments is slated to swell by another 2,670 units, in 20 buildings that are currently under construction or planned for development. While the current residential mix is weighted toward rental homes (with about 60 percent of households owned by a landlord, rather than the occupants), the new developments turn this balance on its head, with 75 percent planned as condominiums and cooperatives.
These metrics may augur favorable conditions for buyers, and a less friendly environment for renters. The Alliance notes that while the median rent is tracking upward (to $3,795, up 1.5 percent from 12 months earlier), the median sales price for co-ops and condos dropped to $931,500, down nearly 7.5 percent from the second quarter of this year, and a 30 percent drop from 2017. This is the first time since the first quarter of 2016, the Alliance report documents, that the median sales price fell below $1 million.
Matthew Fenton
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