By Dan Orlando
Ken McCarthy, senior managing director and regional research director for the Tri-State New York region at Cushman & Wakefield offered 500,000 reasons for rising property prices in New York.
“We have now added more jobs in this cycle, between 2009 and 2015, than we ever have in any up cycle before,” said McCarthy during the company’s first quarter recap breakfast at Michael’s Restaurant yesterday (Tuesday).
“This is what’s driving the urban demand for real estate right now.”
McCarthy credited the half a million employment opportunities that have been created in New York in recent years with helping spur climbing rates and pointed to the younger end of the workforce as the origin for the spiked demand.
“One of the reasons that New York is the place that people want to be is because it has the strong underlying fundamentals,” said McCarthy.
“One of the first ones — and this is a national, indeed a global phenomenon — we’re seeing a tremendous increase in the millennial population in the United States. Millennials are people who were born between 1980 and 2000.
“They are entering the workforce in large numbers,” McCarthy continued. “As a cohort, they are larger than the baby boomers. There are 87 million millennials out there right now, there are about 75 million baby boomers. The baby boomers are aging out of the labor force just as the millennials are coming in.”
While baby boomers used their early adult lives to develop the nation’s suburbs and to partake in urban sprawl, today’s workforce rookies want to be as close to the metropolis of New York as possible. Being they are in demand, companies are looking to cater to their needs.
“This is the next generation workforce that companies want to hire. So the thing about this workforce is, they want to live in cities right now,” said McCarthy. They’re at a stage in their life cycle where they want to live in an urban environment. They want to live, work and play in one location.
“The companies that want to hire them are forced to go into cities to locate their operations there. We’ve seen that happen a lot over the last year, we’ve seen several large companies move into the city to take advantage of this millennial workforce. We expect that to continue in the future.ˮ
The plethora of new tech companies that have been eating up space in the city run the gamut for giants like Google and Miscrosoft to investor favorites like ZOcDoc, Makerbot at MongoDB.
From a dollar volume standpoint, Cushman & Wakefield’s bullish attitude towards a continued rise is certainly justified.
In 2014, sales for commercial and mixed-use buildings totaled $57.7 billion in New York and they reached more than a third of that in the first quarter of this year alone. Should that trend continue, sales of such buildings will register more than $83 billion by the conclusion of 2015.
The higher financial forecasts are coming on the heels of a projected 11 percent drop in the number of properties sold this year as compared to 2014, which reflects the rising prices.
Cushman & Wakefield projects that properties will see a nearly 60 percent jump in sale price in 2015 as compared to 2014.