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Commercial Department: Spotlight: New York: December 2018


Spotlight: New York

The Empire State is a big target for real estate investors.

As one of the original 13 American colonies, New York — also known as the Empire State — has a long and storied history. With a population of 8.6 million people in 2017, according to the U.S. Census Bureau, New York City is the nation’s largest city and is world-renowned for attractions like the Empire State Building, the Statue of Liberty and Broadway.

New York was the most populous state until California surpassed it in the 1960s. Its current population of 19.8 million ranks as the fourth-largest in the U.S. among the states — behind California, Texas and Florida.

New York ranked squarely in the middle of the pack — 25th overall — on the U.S. News & World Report 2018 “Best States” list. The Empire State was judged better than average for health care, infrastructure, and crime and corrections. It ranked among the bottom 10 states for opportunity, however, because of high levels of poverty and income inequality as well as a high cost of living.

New York is pursuing a plan to rebuild its infrastructure over the next few years. Gov. Andrew Cuomo announced a $150 billion investment funded by federal, state and local governments, as well as private sources. This includes $66 billion for transportation projects, $32 billion for energy and environmental investments, and $19 billion to construct and renovate public schools. The plan is expected to create 675,000 jobs.

According to Empire State Development, New York has the second-highest population of scientists and engineers among all states and, among Northeast states, produces the most college graduates in science, technology, engineering and math (STEM) degree programs. Last year, the state created the Excelsior Scholarship, which offers a tuition-free education at all two-year and four-year state colleges and universities to students who pledge to live and work in New York after graduation.

The first half of 2018 saw a 20 percent volume increase in sales of investment properties in New York City, compared with the same period a year earlier, according to the Real Estate Board of New York. Citywide, the $4.2 billion in multifamily sales and the $2.2 billion in hotel sales more than doubled what occurred in the first half of 2017.

Buffalo, the state’s second-largest city, experienced growth in its multifamily market from 2015 through 2017, with average sales prices in the metro area exceeding $50,000 per unit each year, CBRE reported. Buffalo’s industrial sector saw a record-low 3.5 percent vacancy rate in 2017, and that figure was expected to remain low through 2018, driven in part by the recent corporate-tax reforms at the federal level, CBRE said.

Skip to 3 Cities to Watch>>  

Manhattan office marketc_2018-12_Spotlight_Chart-1

According to a report from real estate services company Cushman & Wakefield, the Manhattan office market stayed relatively flat this past second quarter, with the vacancy rate of 9.2 percent unchanged, and the average asking rent of $72.67 per square foot slightly higher compared to second-quarter 2017. Net space absorption doubled over the same period, however, to 4.2 million square feet, and there was 17 million square feet of office construction underway as of the past second quarter.

Cushman & Wakefield expected slight increases in vacancy rates and rental rates in Manhattan’s Midtown South submarket during the latter half of 2018 as a portion of the Hudson Yards project comes online. Construction of Three World Trade Center ended in the past second quarter, pushing downtown Manhattan’s vacancy rate to 11.3 percent, the neighborhood’s first double-digit vacancy rate since 2016.

Focus: Financial services

Wall Street has a dominant influence on the global-financial markets. It is home to the New York Stock Exchange, which includes more than 2,400 publicly traded companies. According to Empire State Development, the state’s educated workforce and low operating costs are attractive to a variety of companies. More than 9,800 insurance companies are located in New York. 

The state’s financial-activities sector — which includes banking, insurance, real estate and securities — added more than 38,000 jobs from 2009 to 2017, according to the Office of the New York State Comptroller. About 723,000 New Yorkers were employed in financial activities as of August 2018, although the sector had annual employment growth of less than 1 percent for the fourth straight month, the U.S. Department of Labor said.


In the 12 months ending this past September, New York added 6,300 private-sector jobs, and the state’s unemployment rate dropped to 4.1 percent — the lowest level since June 1988, according to the New York Department of Labor. The metro areas with the largest year-over-year net employment gains as of this past August included Nassau-Suffolk (10,000 jobs added), Buffalo-Niagara Falls (6,800 jobs added) and Orange-Rockland-Westchester (7,000 jobs added).

During the same time frame, the state added 45,100 positions in educational and health services; 19,700 jobs in leisure and hospitality; and 14,700 jobs in construction. New York City’s unemployment rate of 4.2 percent as of this past second quarter was a record low, dating back to 1976, according to the city’s comptroller. The Big Apple added more than 13,000 jobs between April and June 2018, many of them in education, health care, professional services and social services.

Sources:, CBRE, Cushman & Wakefield, Democrat & Chronicle, Empire State Development, Forbes, Gov. Andrew M. Cuomo’s Office, Nasdaq, New York Department of Labor, New York Post, Office of the New York State Comptroller, Onondaga County, Real Estate Board of New York, State of New York, Syracuse University, The Post-Standard, Times-Union, U.S. Census Bureau, U.S. Department of Labor, U.S. News & World Report. 

3 Cities to Watch


This city of about 143,000 people — the county seat of Onondaga County and widely known for Syracuse University and its successful athletic programs — has struggled economically in recent times. The city ranked last in economic growth in a 2017 Brookings Institution report on the nation’s 100 largest metros. Syracuse and the surrounding region were poised for improved job growth and wage growth in 2018, however, especially if the pool of skilled laborers grows.

Onondaga County’s largest employers include Upstate University Health System, Lockheed Martin and Time Warner Cable.


The state capital and home to 98,000 residents, Albany has a median home price of $172,700 and a median household income of $42,335,  according to census figures. Heading into 2018, the economic outlook was mixed for Albany and the surrounding Capital Region, which has a population of more than 850,000. Companies like Regeneron Pharmaceuticals and Taconic Biosciences are thriving, although the labor market may be constricted over the next 10 to 15 years as retiring baby boomers are expected to outpace younger people entering the workforce.


More than 200,000 people live in this city on the shores of Lake Ontario, about 75 miles east of Buffalo. The median home price is $73,000 and the cost of living is 18 percent below the national average, according to Forbes. The construction industry has been booming of late, with 8.5 percent year-over-year employment growth as of this past August, according to labor statistics. The University of Rochester employs 29,000 people, with Rochester Regional Health and Wegmans Food Markets each employing more than 13,000.

What the locals say

“The biggest of our consumers of office leases right now are the co-working tenants. WeWork now has become the largest commercial office tenant in the city of New York, with almost 5.5 million square feet of office space that they’ve leased, so that’s very significant. … Certainly, internet sales have had a major impact on retailers’ willingness to rent stores, so we’ve seen a real slowdown in retail. We’ve seen landlords now are cutting rents so, depending on the market, rents have gone down anywhere from 20 to 40 percent. … There just might be too much retail space in New York for the demand.” c_2018-12_Spotlight_local

James Wacht
President, Lee & Associates NYC


Neil Pierson is editor in chief of Scotsman Guide Media. Reach him at or (800) 297-6061.

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