During the first three quarters of 2001, economic expansion in the New York/New Jersey region has been slowing. For the 12 months ending September 2001, employment in New York State grew by 27,800 jobs, or 0.4 percent, compared with the same period a year earlier. A gain of 57,600 jobs in the services sector helped offset declines in other sectors. September was the fifth straight month of job declines. Over the 12 months ending September 2001 employment declined in the Binghamton, Buffalo-Niagara Falls, Elmira, Rochester, and Utica-Rome areas in upstate New York. The unemployment rate for the State was 4.9 percent in September 2001, up from 4.5 percent as of September 2000. Employment in New Jersey declined slightly in the 12-month period ending September 200l. New Jersey’s unemployment rate was 4.5 percent in September 2001, up from 3.8 percent in September 2000.

In New York City, the number of private-sector jobs increased by 12,000, or 0.4 percent, in the 12-month period ending September 2001. The city lost 11,130 jobs in September 2001, 4,000 of which were in business services. There have been 25,000 job losses in business services since April 2001. Job losses are certain to rise as a result of the World Trade Center tragedy. In the 30 days after September 11, approximately 22,000 people requested job-loss benefits as a direct result of the World Trade Center disaster. Excluding these job losses, the city’s unemployment rate was 6.3 percent in September 2001 compared with 5.5 percent a year earlier.

The September 11 events destroyed 13.4 million square feet of office space at the World Trade Center and damaged approximately 16.6 million square feet in the surrounding area. The destroyed or damaged space comprises 36 percent of the downtown office market. Many of the damaged buildings are expected to be repaired and ready for reoccupancy within the next 6 months. However, there is uncertainty about whether lower Manhattan will remain the financial center of the city after the recovery. Stephen Spinola, president of the Real Estate Board of New York, stated that “deals or handshakes” have already been made for approximately 6.2 million square feet of office space, much of it in midtown Manhattan. The Securities Industry Association, a trade group for financial firms, reported that more than half of the 45,000 employees of its members and suppliers have relocated to parts of New York City outside lower Manhattan. Conducted by Tenantwise.com, an online commercial broker, a survey of 47 of the largest tenants in the affected buildings in lower Manhattan (which account for more than 85 percent of the previously occupied space in these buildings) indicates that a significant number plan long-term relocations to outside lower Manhattan.

American Express has moved its 3,200 World Trade Center employees to Parsippany and Short Hills, New Jersey and Stanford, Connecticut. Morgan Stanley, which employed 3,500 at the World Trade Center, and Lehman Brothers both are moving some operations and employees to Jersey City. The Port Authority of New York and New Jersey has relocated 2,000 employees to offices in midtown Manhattan and Newark.

Office markets have tightened in the New York City suburbs after September 11, particularly in Northern New Jersey, due to the relocations. Available office space in the Jersey City area along the Hudson River waterfront is practically nonexistent. Office construction has been brisk in northern New Jersey, where the volume of new construction was reported to be up 80 percent compared with this time in 2000.

The rental and sales markets in Manhattan remain healthy but unchanged despite the slowdown in the economy and recent events. The Real Estate Board of Manhattan reported that the cooperative/ condominium market remained flat during the first 6 months of 2001. Rents for the same period were down 1.9 percent, according to the midyear report by the brokerage firm of Feathered Nest. Some decline in rents and sales prices are expected as a result of the events of September 11, but the decline is not expected to be substantial. The rental and sales markets in the outer boroughs of New York City have largely been unaffected.

Lower Manhattan’s residential areas have, as expected, been affected by recent events. The demand for housing in the area was very localized. Approximately 50 percent of the residents in lower Manhattan walk to work. Since the mid-1990s approximately 5,000 rental apartments were developed in more than 50 buildings formerly used for commercial purposes. In addition, several thousand people live in newer buildings in Battery Park City. Even before September 11 the rental market in the World Trade Center-Battery Park area was not as tight as elsewhere in Manhattan. Rents for units in the rehabilitated commercial buildings were down 10 to 15 percent, and landlords were offering 1-month rental concessions. Since September 11, several landlords of large apartment buildings have given tenants rent reductions of as much as 20 percent, plus 1-month’s free rent. In one large development rents have been cut by 25 percent. Occupancy rates have fallen to as low as 50 percent (most buildings have an occupancy rate around 70 percent), for tenants have canceled their leases.

In the second quarter of 2001 sales of single-family homes in New York State declined approximately 5 percent compared with the second quarter of 2000, according to the New York State Association of REALTORS^® but the sales market was still described as healthy. Sales were up sharply in the Albany, Syracuse, and Utica metropolitan areas, as well in Dutchess and Orange Counties. The secondquarter average statewide sales price of $136,501 for single-family homes represents a 4-percent increase from the second quarter of 2000. In New Jersey single-family home sales in the second quarter of 2001 were 5 percent below a year earlier according to the New Jersey Association of REALTORS^®. The median sales price was $205,800 in the second quarter.

Single-family building permit activity in the New York/New Jersey region totaled approximately 30,000 homes in the first 8 months of 2001, a 7-percent decline compared with the same period in 2000. Multifamily permit activity for the region totaled approximately 18,400 units for the period, a slight 1-percent increase compared with the first 8 months of 2000. In the New York City metropolitan area multifamily activity was up 15 percent.

Spotlight on Camden, New Jersey

The Camden area consists of Burlington, Camden, Gloucester, and Salem Counties. As of the 2000 census, the metropolitan area had a population of 1.3 million, a 5-percent increase from 1990. A substantial portion of growth in the area occurred in Burlington and Gloucester Counties, where population increased 9 percent. At present, the majority of growth in the Camden area is occurring in northern and central Burlington County and central Gloucester County.

Camden, on the other side of the Delaware River from Philadelphia, has experienced a long economic decline and loss of both employment and population. However, major redevelopment is under way, much of it centered on the riverfront. A minor league baseball stadium and an aquarium have already been built. In October 2001, the battleship USS New Jersey is scheduled to open for visitors. Construction is under way on a light-rail line connecting Camden and Trenton; completion is expected in 2003. The first stage of residential conversion of up to 500 rental units at the former RCA factory is expected to start by spring 2002. Rents for two-bedroom apartments are expected to be approximately $1,200, about 20 percent less than comparable units in Philadelphia.

The two largest private employers in the metropolitan area are Cendant Mortgage and Lockheed Martin, with 4,800 and 3,500 employees, respectively. Nonfarm employment in the Camden area increased by 3,200 jobs, or 0.6 percent, in the 12 months ending September 2001. Unemployment is estimated at 4.1 percent in September 2001, a 0.6-percent increase from September 2000.

Due to lower land costs, prices for new single-family homes in the Camden area are appreciably lower than comparable homes in the suburban areas of the adjacent Philadelphia markets. Single-family building permit activity for the first 9 months of 2001 totaled 2,923 homes. Activity in Burlington and Gloucester Counties accounts for approximately 80 percent of the new homebuilding in the area.

According to the New Jersey Association of REALTORS^®, the median sales price in the Camden area in July 2001 was $135,700, an 8.2-percent increase from a year earlier. Median sales prices for single-family homes differed considerably between counties, coming in at $91,500 in Salem County, $103,500 in Camden County, $131,000 in Gloucester County, and $150,000 in Burlington County.

Despite a negligible volume of rental production during the past 2 years, the rental market remains relatively balanced, with an estimated overall vacancy rate of 5 percent as of mid-2001. Market conditions are somewhat tighter in the Marlton, Moorestown, and Mount Laurel areas and at the McGuire Air Force Base-Fort Dix area. Apartment rents start at $600 a month for one-bedroom units and $750 for two-bedroom units. Marcus and Millichap’s Apartment Research Report estimated that apartment rents increased 5 percent in the 12 months ending July 2001 in class A rental developments in Camden County.

The Camden area has experienced a significant increase in residential care housing for the elderly in recent years. New Jersey Department of Community Affairs data show that since 1997, a total of 1,697 beds in 20 assisted-living projects were constructed in the market area. An additional 6 projects totaling 554 units are under construction. Typical monthly charges for studio apartments start at $2,900 a month. Absorption of new units has been slower than anticipated in middle Camden County and eastern Gloucester County, where there are concentrations of developments.