Employment growth in 2000 in the New York/New Jersey region has been moderate. New York State employment increased by 162,300 jobs, or 1.9 percent, between November 1999 and November 2000; New Jersey’s employment increased 1.4 percent. The unemployment rate in New York State fell to 4.6 percent, compared with 4.9 percent in November 1999. In New Jersey the rate was 4 percent, compared with 4.4 percent a year earlier. The economy in New York City remains strong despite the turbulence in the financial sector and contraction of employment in Internet firms. New York City gained 90,000 jobs in 2000 for a 2.4-percent annual rate of growth.

Although New York City’s economy continues to expand, rents for office space in Manhattan’s previously very hot office market began to level off towards the end of the year after rising sharply for most of 2000. Commercial brokers believe the market will remain strong but be more balanced.

Bidding wars for office space have ended, and there is increased willingness on the part of some landlords to negotiate leases. Financial firms have taken over a good deal of the space vacated by Internet companies. As of December, office rent in Midtown averaged $61.81 per square foot, approximately 1.7 percent lower than the average in September.

Building permits in New York and New Jersey totaled 77,676 units in 2000, a 5.4-percent increase over 1999. Multifamily permit activity in the New York City metropolitan area increased 26 percent during the period to 14,514 units. In the Bergen-Passaic metropolitan area, multifamily permit activity this year was almost triple the volume in 1999.

NAR reported that sales of existing single-family homes in the State for 2000 were almost unchanged from 1999 levels. In the New York and Nassau-Suffolk areas the median sales prices for the year increased by double digits. In New Jersey resales for 2000 declined 2 percent from 1999, and median sales prices in the northern New Jersey market were also up 10 to 15 percent over 1999.

Although the rental market remains tight, rents in Manhattan have dropped after 7 years of increases. Sales prices of cooperatives and condominiums have also stabilized. According to the brokerage firm of Douglas Elliman, rents for one-bedroom units at the end of 2000 were 10 to 12 percent below those in the summer of 2000, and rents for two-bedroom units were down 8 percent. However, strong demand keeps rents high. Rents for studio apartments of $1,800 a month are common, and rents for one-bedroom apartments are approximately $2,500 a month. Except for the exclusive Brooklyn Heights area, rents have not dropped in the outer boroughs or in adjacent communities in New Jersey.

In the New York City suburbs, developers responding to an increased demand for housing and a dwindling supply of buildable sites are actively developing vacant commercial buildings and industrial sites for luxury residential complexes. In Clifton, New Jersey, a 42-acre former industrial site is being redeveloped as an upscale gated residential complex. Known as Cambridge Crossings, the project will contain 637 condominium apartments and town-homes. Prices average $235,000 for the townhouses and $166,000 for the condominiums. In Nutley, New Jersey, the final 105 units of a 65-acre, 602-unit gated community is being completed on a site that once belonged to ITT. In Tuckahoe, New York (in Westchester County), a luxury 88-unit rental complex known as Rivervue is nearing completion at a former Revlon plant that had been vacant for more than a decade. Rents start at $2,800 for a large one-bedroom unit.

In northern New Jersey, New Jersey Transit, a commuter rail line, is working on mixed-use developments within walking distance of transit hubs. As part of this effort, it recently selected a developer for a project to be built on a 3-acre site across from the train station in Morristown’s reviving central business district. The development will consist of 266 rental units, 8,000 square feet of commercial space, and 780 parking spaces. Other projects are in various stages of development near train stations in Rutherford, South Orange, and South Amboy. In Newark, a three-story customer service center for MBNA America Bank is nearing completion. The building is the first office property to be built in Newark in more than a decade. In Jersey City,
work is scheduled to commence on a 32-story, 1.1-million-square-foot speculative office building at the Lefrak Organization’s Newport Office Center. It will be known as Newport Office Center VII. Newport Office Centers V and VI, totaling 1.2 million square feet, are under construction. On completion they will be occupied by Chase Manhattan Bank.

Spotlight on Elmira-Corning, New York

The Elmira-Corning area includes Chemung and Steuben Counties. Based on preliminary estimates from the U.S. Census Bureau, the area lost approximately 2.5 percent of its population between 1990 and 2000, dropping to 189,437 persons. However, economic developments in recent years are being relied on to reverse the trend.

The economy of the Elmira-Corning area has traditionally been dependent on manufacturing. Corning Incorporated is the largest private-sector employer in the area. In 1998, Corning Incorporated, formerly Corning Glass, Inc., divested several traditional consumer products and invested extensively in fiber optic and photonics research and development for applications in cable television, computers, and Internet communications. Local research and development activities at Corning are concentrated at the company’s facilities in Erwin, New York. Total employment at Corning facilities in the area is currently estimated to be at approximately 7,000 people.

In the 12 months ending November 2000, non-agricultural employment in the area increased by approximately 2,400 jobs, or 2.8 percent. Gains in Steuben County accounted for more than 80 percent of the increase. It is estimated that more than 50 percent of the newly created jobs were in either high-paying manufacturing or professional service sectors. As of November, the unemployment rate for the area had declined from 5.3 percent a year ago to 4.4 percent. Labor shortages continue to exist in certain high-technology occupations.

A substantial part of the sales market in the Elmira-Corning area consists of older, modest homes. Consequently, the market is extremely affordable. Existing home sales in the area have increased significantly since 1997. In 1997, existing home sales totaled 1,564 homes. In 1998 and 1999, the most recent period for which data are available, sales averaged approximately 1,900 homes annually. The median sales price for homes in 1999 in Chemung and Steuben Counties was $69,500 and $58,000, respectively.

Residential construction in the Elmira-Corning area was relatively steady between 1990 and 1999, averaging approximately 350 units annually. Paralleling the recent growth in the local economy, activity increased dramatically in 2000. It is estimated that during the year permits were issued for more than 650 residential units. Approximately 75 percent of the residential construction in the metropolitan area has been for single-family homes. In recent years, much of the new residential construction in the Elmira-Corning area has been high-end single-family homes and upscale apartment developments to accommodate the influx of high-wage managers, executives, scientists, and researchers. Most of the new sales housing is concentrated in subdivisions located along the Route 17 corridor that extends east and west between Corning and the Horseheads/ Big Flats area. Prices for new single-family homes start in the upper $100,000s. Luxury homes larger than 3,000 square feet are priced between $300,000 and $450,000.

During most of the 1990s, multifamily rental housing construction averaged only 30 units per year. However, with the expansion of the local economy in 1998 several relatively large rental developments have been built. A 160-unit, FHA-insured, market-rate rental property was constructed in Chemung County. Another development of 144 units was built in Steuben County near the Corning research facilities. Local sources report that the rental housing market remains relatively tight, with vacancy rates of 3 percent or less in most properties and rates even lower in the newer upscale developments. Rates in older rental properties are running at approximately 5 percent.