Economic Research & Analysis

December 2011 Economic Snapshot

Inside this Volume

Private employment fell by 5,500 in October 2011 after a decrease of 14,500 jobs in September.
The unemployment rate rose to 8.8 percent in October from 8.7 percent in September.
The Manhattan hotel occupancy rate in September 2011 was 90.2 percent, up from 88.7 percent in September 2010.
The Manhattan Class A office vacancy rate was 7.8 percent in November 2011, while the average asking rent was $67 PSF.
Passengers in NYC area airports totaled 9.9 million in August 2011, down 3.6 percent from August 2010.

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#23 Second Homes in NYC

Exactly how large is New York City's secondary housing market?

Employment

  • Private sector jobs in New York City fell by 5,500 in October 2011 after a decrease of 14,500 in September.
  • In the same period, government jobs in the City rose by 3,600 resulting in a net decrease of 1,800 total private and public sector jobs.
  • Since October 2010, private sector employment has risen by 20,300 jobs or 0.6 percent.
  • The City’s unemployment rate rose to 8.8 percent in October from 8.7 percent in September.
  • Between September and October 2011, the number of employed City residents rose by 7,900 and the number of unemployed City residents rose by 3,800.

Secondary Homes

Shares of Secondary Homes in Selected Counties and U.S. Median, 2010

  • Secondary homes (homes that are not used as a primary residence) are typically associated with resort areas. However, anecdotal evidence has indicated that this segment of the housing market has gained importance in New York City. In fact, it is often suggested that in recent years demand for housing by out-of-towners partially offset the weakness in local demand.
  • The 2010 Decennial Census provides data to determine the share of secondary homes in New York City and in the nation. Specifically, secondary homes can be analyzed using what the Census refers to as vacant homes used for recreational, seasonal or occasional use.
  • According to the latest Decennial Census, only 1.2% of all housing units in New York City can be classified as secondary homes. The data, however, reveals significant variation at the borough and census tract level.
  • Most secondary homes are located in Manhattan, where they account for more than 3% of all housing units. The share of secondary homes outside Manhattan is considerable lower, ranging from 0.2% in the Bronx to 0.7% percent in Queens. These figures compare to the median across all counties in the nation of 2.8%.
  • As expected, counties that have a large share of seasonal residents like Palm Beach and Broward in Florida, as well as nearby Suffolk County show a high concentration of secondary homes ranging from 6.8% to almost 10% of total units.
  • Focusing more closely on Manhattan, a large concentration of census tracts where secondary homes account for more than 5% of all units are found in Midtown Manhattan and the immediate area around Central Park. More than 50%of all secondary homes are concentrated in areas2 where the median home price is higher than $800,000 and more than 27%are located in areas where the median home price exceeds $1 million.
  • The data also indicate that the share of secondary homes in the City has been gradually increasing since 2000, a trend that is also reflected in the national statistics. With the exception of the Bronx, all boroughs have seen an increase in secondary homes since 2000, most notably in Manhattan where the share has increased from 2.4% in 2000 to 3.3% in 2010.
  • For Manhattan, the increase in secondary homes has accounted for almost 18% of the overall increase in total housing units, providing support to the view that this segment of the market grew robustly over the decade.

Median Home Prices in NYC

Source: U.S. Census Bureau

Real Estate and Construction

Manhattan Office Market

  • In November 2011, the Manhattan Class A direct vacancy rate fell to 7.8 percent from 8.0 percent in October while the average rental rate rose $1 PSF to $67 PSF.
  • In the same month, the Midtown Class A direct vacancy rate fell to 8.3 percent and the rental rate rose to $73 PSF.
  • The Manhattan Class A sublease vacancy rate in November fell to 1.8 percent from 1.9 percent in October.

Construction

  • For the twelve months ending October 2011:
  • Building projects (including new, additions and alterations) that started construction in NYC increased by 30.8 percent and infrastructure (non-building) project starts fell by 3.8 percent from the twelve months ending October 2010.
  • Planned space for building project starts rose by 14.1 percent from the same period in 2010.
  • 2,582 residential building projects with 11,010 units of housing started construction, increases of 20.8 percent and 27.5 percent, respectively over the period.

Source: McGraw Hill Construction

Tourism, Travel and Transit

Transit Ridership

  • Total ridership on MTA subways, trains and buses in October 2011 was 230.8 million, a decrease of 0.4 percent from October 2010.
  • Subway ridership in October 2011 was 144.1 million, an increase of 1.5 percent from October 2010.

Source: Metropolitan Transportation Authority

Tourism and Travel

Air Traffic

  • In September 2011, 8.8 million passengers flew into and out of the region's airports, an increase of 2.1 percent from September 2010.
  • Domestic air carriers accounted for 5.7 million passengers, a 1.5 percent increase from the same month last year.
  • 3.1 million passengers traveled with international air carriers in September 2011, a 3.1 percent increase from September 2010.

Source: Port Authority of New York and New Jersey

Broadway Ticket Sales

  • Total Broadway attendance was approximately 898,000 during the four weeks ending October 30, 2011, down 8.6 percent from the same period last year.
  • Broadway revenue during this period was about $83.7 million, up 3.6 percent from last year.

Source: The Broadway League

Hotel Occupancy

  • In October 2011, the average daily hotel room rate was $323, a 4.2 percent increase from October 2010.
  • Hotel occupancy was 90.7 percent in October 2011, up from 87.8 percent in October 2010.
  • The average daily hotel room rate increased the most in lower-priced hotels (charging between $200 and $275 per night).

Source: PKF Consulting