Employment in New York State increased by 172,200 jobs (2 percent) during the 12 months ending February 2000, representing the largest annual rate of growth in the last 15 years. Employment in downstate New York (New York City, its northern suburbs, and Long Island) increased approximately 3 percent during the period. Employment gains were led by the approximately 7-percent increase in jobs in the business services and construction sectors. New York's unemployment rate was 4.7 percent in February 2000, down from 5.3 percent in February 1999. A substantial portion of the decrease came in New York City, where the unemployment rate for February 2000 was 5.8 percent, down substantially from 7.1 percent in February 1998. Employment in New Jersey increased by 59,100 jobs (1.7 percent) during the same period. New Jersey's unemployment rate was 4.1 percent in February 2000, down from 4.5 percent in February 1999.

Building permits in New York and New Jersey totaled 16,045 units in the first quarter of 2000, a 6-percent increase over the same period in 1998. New Jersey issued multifamily housing permits for 2,609 units, up 70 percent compared with the first 3 months of 1999. Shortages of labor, building materials, and buildable sites are keeping builders in downstate New York and northern New Jersey from providing enough new supply.

According to the New York State Association of REALTORS^®, statewide existing home sales in 1999 set a record for the second straight year; the average sale price reached $123,500, a 7-percent increase from 1998. The New Jersey Association of REALTORS^® reported that existing single-family home sales increased 9 percent in 1999 compared with the previous year, and the median sale price of $205,000 was 4 percent higher than in 1998. Activity was especially strong in the northern New Jersey suburbs. Home sales for 1999 were up 40 percent in Passaic County and 19 percent in Essex County.

The rental housing market continues to be very strong in New York City. Recently released data from New York City's 1999 Housing and Vacancy Survey disclosed that the rental vacancy rate for 1999 declined to 3.2 percent. Manhattan's rental vacancy rate for 1999 was only 2.6 percent. The vacancy rate in apartments renting for more than $1,700 a month was reported to be 5.7 percent. Rents rose 11 percent during 1999 for apartments on the Upper East and West Sides of Manhattan, according to a report issued by Feathered Nest, a real estate firm specializing in rental properties. Despite this robust gain, rents for studio and one-bedroom units dropped 1 to 2 percent in the Downtown market (south of 14th Street), where most new rental units have been added. The Downtown market is tight to balanced, and overall, Manhattan remains tight.

The rental market in the Hoboken-Jersey City area is also very strong. Developments in the area offer lower rents than in Manhattan and a quick PATH train commute to the Wall Street financial district and Midtown Manhattan. Approximately 3,500 rental units are currently in development in the Hoboken-Jersey City area.

The big decline in supplies of available cooperatives and condominiums has meant a very hot market and big price increases during the past 3 years. The median sale prices of cooperative apartments in Manhattan continued to soar in 1999. According to the Real Estate Board of New York's Annual Cooperative Sales Report, prices were up 20 percent for studio apartments, 24 percent for one-bedroom apartments, 9 percent for two-bedroom apartments, and 10 percent for three-bedroom apartments. The real estate firm of Douglas Ellman reported that the median sale price of cooperative and condominium apartments in 1999 was $325,000.

New York City's office markets tightened further in 1999, led by strong demand from high-technology, new-media businesses and financial services firms. The vacancy rate in Midtown Manhattan at the end of 1999 fell to a 14-year low of 5.7 percent. Manhattan's office rents rose approximately 8 percent in 1999.

Home sales in New York City's outer boroughs and suburbs were very strong in 1999. According to a comprehensive study conducted by Case Schiller Weiss, Inc., sale prices rose for the second straight year in all 130 ZIP code areas in the boroughs outside Manhattan. The Long Island Board of REALTORS^® reported that the median price for a single-family home in Queens was $190,000, up 2.7 percent from 1998. The Staten Island Board of REALTORS^® reported that the median price for a single-family home was $177,000 in 1999, a 7.3-percent increase over 1998. Big price increases were also reported for the New York City suburbs. Case Shiller Weiss reported that, for a second year in a row, prices were up in each of the 576 ZIP code areas in the 14 counties surrounding the city.

Spotlight on Utica-Rome, New York

In the 12 months ending in February 2000, nonagricultural employment in the Utica-Rome metropolitan area increased by approximately 3,000 jobs (2.3 percent) to 133,400. Since 1995 the area has experienced a modest rate of employment growth, resulting in a gradual decline in area unemployment levels. The unemployment rate as of February 2000 was 5.7 percent. Current employment in the metropolitan area has almost recovered to the levels of the early 1990s.

The closure of Griffiss Air Force Base, the major economic force in the area, in the early 1990s resulted in the loss of an estimated 6,500 military and civilian jobs and a significant number of defense contracts. The Utica-Rome area now has a more diversified economic base. Major employers include Fleet Financial Group, Oneida Ltd., PAR Technology, several New York State correctional facilities, and a large Wal-Mart distribution center. The metropolitan area has also become a regional healthcare center with several large hospitals. Back-office banking and insurance operations and telemarketing firms are important new sources of employment. Griffiss Business and Technology Park, the former military installation, now contains numerous private firms with a total workforce in excess of 3,000 employees. Major tenants at the technology park include Rome Laboratory, the Defense Finance and Accounting Service, the Air Force Research Laboratory, Orion Bus Industries, Environmental Contractors, and Pallet Services, Inc.

Tourism has also become an important economic factor in the area as a result of the Turning Stone Casino operated by the Oneida Indian Nation. The gaming casino and associated operations employed an estimated 3,000 workers in 1999 and generated more than $150 million in annual payroll and benefits. Turning Stone Casino is a major tourist attraction in the area and includes two hotels, two golf courses, a conference center, and other commercial and retail operations.

With the economic downturn in the area during the first half of the 1990s, the total population within the Utica-Rome metropolitan area declined by more than 23,000 persons (7.5 percent) from 1990 to 1999, falling to about 293,000 persons. Approximately 60 percent of the loss occurred in the cities of Utica and Rome. However, international immigration to the area has totaled approximately 6,000 persons in recent years, helping to offset population losses. Refugees from Bosnia have made up almost half of the immigration.

As a result of the closing of the Air Force base, residential construction declined significantly from 1995 to 1999, to an average of 340 units a year compared with an average of about 750 units annually in the first half of the decade. Since 1995, about 90 percent of the residential construction has been single-family homes. Excluding assisted-living housing for the frail elderly, there has been virtually no large-scale multifamily rental housing construction within the past 5 years. A few small apartment complexes and townhouse developments of less than 50 units have been developed in the suburbs.

The rental housing market remains soft, with relatively high vacancy rates throughout the metropolitan area. The overall rental vacancy rate in both Utica and Rome is estimated to be more than 10 percent. Rents are flat in most areas, with increases only in the most desirable suburban properties and usually not exceeding 2 percent.

Sales housing in the Utica-Rome area is very affordable. According to New York State Association of REALTORS^®, the median sale price of existing single-family homes in the area was $75,175 in 1999, up 2 percent from 1998. In 1999, existing home sales in the area totaled 1,425 homes, up 8 percent from 1998.