According to industry experts, New York City's real estate market will recover ahead of other areas of the country, and perhaps by the end of the year. Many believe that most of New York's overbuilt office space inventory will finally be absorbed in 2010. What's more, distressed properties will become available through deals or foreclosure sales. Furthermore, developers will have the opportunity to begin repositioning themselves as land, construction and renovation costs drop to more reasonable levels.
The Urban Land Institute warns that New York will see vacancy rates skyrocket into the mid teens, office rents plummet 40% and co-op prices drop 25% in its 2010 market forecast. But it also says "New York offers savvy investors opportunity and more affordable costs over the long term."
Experts bet that New York will recover before other areas of the country because in his view, the region didn't indulge as much in over-development as did places like Las Vegas and Miami. The high construction costs and the wherewithal needed to obtain all the necessary permits prevent many speculators from coming in and developing properties in Manhattan.
Those barriers give well-financed industry players an advantage during times of crisis like now. Since many companies resisted buying properties or starting new projects when the market was peaking between 2005 to 2008, they did not become loaded down with debt. Nor are they stuck owning properties that are now worth significantly less than they were just a few years ago.
When looking at investment opportunities, residential is the healthiest area of real estate because the need for housing is perpetual. Commercial, which will benefit when jobs return, is the next strongest area, followed by hotel, which is benefiting from strong tourism. As prices continue to drop in 2010, individuals should look for opportunities to buy property in Manhattan at a discount while they can.
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