Economic expansion in New York and New Jersey during the 12-month period ending in November 1999 proceeded at a slower pace than during the comparable period in 1998. New York State employment increased by 163,500 jobs, or 1.9 percent, between November 1998 and November 1999, while New Jersey employment was up 67,200 jobs (1.7 percent). New York's unemployment rate was 5 percent in November 1999, down from 5.5 percent in November 1998. New Jersey's unemployment rate was 4.3 percent in November 1999, down from 4.5 percent in November 1998.

Private-sector employment in New York City during the first 11 months of 1999 increased by almost 80,000 jobs (2.9 percent), compared with 78,000 for all of 1998. Business services and construction were particularly strong, with employment gains of 8.5 and 7.0 percent, respectively. The City's unemployment rate was 6.4 percent in November 1999, down substantially from 8.0 percent a year earlier.

New York City's commercial real estate market was very strong in 1999. Prices and rental rates rose as the number of vacancies fell. The significant growth of high-technology and Internet-related companies in parts of Manhattan has been a major factor in the rebounding market. The office vacancy rate in downtown Manhattan has dropped to 7.7 percent. Rents have reached $37 per square foot annually in Class A office buildings. The strengthening of the downtown office market has slowed the pace of conversion of office buildings to residential properties.

In Midtown Manhattan, rents for new Class A space frequently exceed $70 per square foot annually, which is spurring new construction. According to Cushman and Wakefield, almost 1.5 million square feet of new office space were completed in 1999, compared with just 112,000 square feet the year before, and an additional 3.3 million square feet are under construction. The commercial real estate market is also very strong along New Jersey's Hudson River shoreline.

Residential building permit activity in New York State totaled 41,517 units in 1999, up 8 percent from a year earlier. Substantial increases in single-family permit activity were recorded in the Buffalo, New York City, and Rochester metropolitan areas at 12 percent, 23 percent, and 16 percent, respectively. Rochester-area multifamily housing activity during 1999 was more than double that of 1998. New Jersey residential building permits totaled 32,159 units in 1999. In the Bergen-Passaic area, single-family activity for the year was up 15 percent over 1998. Multifamily activity in the Jersey City area was up 26 percent for the year. As in Manhattan, the rental housing market across the Hudson River has been very strong. In Hoboken, approximately 2,500 rental units in waterside developments are either under construction or approved. HUD recently committed to insure the mortgage on a 526-unit development. Rents will start at about $1,300 for studio apartments and range to $2,800 for 3-bedroom units.

According to the NATIONAL ASSOCIATION OF REALTORS^®, sales of existing single-family homes in New York State during 1999 were down 2 percent from a year earlier to 179,500 homes. Resales for the year in New Jersey were up 14 percent to 141,900. In the Nassau-Suffolk area, home prices are reaching record levels. The median sales price of a single-family home in 1999 was $190,400, up 8.6 percent from 1998. Price increases of 6 to 8 percent in 1999 have been typical for much of the New York-Northern New Jersey-Long Island area.

Spotlight on Newark, New Jersey

The Newark metropolitan area consists of Union, Morris, Essex, Sussex, and Warren Counties in Northern New Jersey. Since 1990, the population of the area grew only 2 percent to 1,955,615 persons as of July 1, 1998, although the rate of growth was much higher in suburban Morris, Sussex, and Warren Counties. A significant level of international immigration has kept the population from declining in the urban core areas.

Nonagricultural employment growth in the Newark area was very strong during the 12 months ending in November 1999, up 2.2 percent to 1,003,400 jobs. Retail trade recorded the greatest percentage increase, 5 percent, propelled by the opening of the 1.6-million-square-foot Jersey Gardens Outlet Mall in Elizabeth. The unemployment rate in November was 3.9 percent, down slightly from 4.0 percent in November 1998.

Since the New Jersey Performing Arts Center opened in 1997, the office market in downtown Newark has improved significantly. The vacancy rate for Class A space is reported to be less than 3 percent. Increased demand has spurred a number of projects. In November, IDT, a rapidly growing provider of communication services, leased and moved to the 450,000-square-foot former Mutual Benefit Life building. Eventually, as many as 1,100 employees will be moved to Newark from Bergen County. Six older vacant office buildings are currently undergoing major renovations, and a site for a new 600,000-square-foot office building has been sold to a consortium of developers.

Single-family building permit activity in the Newark area in 1999 totaled 3,889 homes, 5 percent ahead of the volume for 1998, making 1999 the strongest year of the decade. Multifamily activity was also very strong. Permits were issued for 1,352 units, 67 percent greater than the 1998 volume.

The strong demand for single-family homes and the lack of available supply have made the Newark area a seller's market. The Garden State Multiple Listing Service, which covers Essex, Morris, and Union Counties, reported that the median sales price for homes in 1999 was $209,000, up 10 percent from the median price in 1998. Sales in 1999 totaled 3,810 homes, slightly less than 3 percent below sales in 1998. New-home sales have also been very strong. New single-family homes, which typically have four bedrooms, on half-acre lots are selling for $400,000 and up.

The rental housing market in the Newark metro-politan area is tight, with a vacancy rate estimated at approximately 3 percent. Conditions in Morris County are the tightest in the metropolitan area. In 1999 only 1 general-occupancy building of 100 or more units came on the market in Morris County, and it leased up very rapidly at rents of $960 for 1-bedroom and $1,225 for 2-bedroom units.

The seniors housing market has been very active recently in the Newark area. Within the 18 months ending in December 1999, 10 assisted-living communities for the elderly, with more than 1,000 units, entered the market. Six developments, with more than 570 units, are currently under construction. Typical total monthly charges for shelter and care begin at $3,000. Local sources have indicated concern about the large increase in the supply.