Beige Book shows cool earnings for the late summer - by Faith Hope Consolo

Faith Hope Consolo, Douglas Elliman

Many businesses across the nation saw expanding economic activity from July through mid-August, although at modest levels in New York, Philadelphia, Atlanta, Kansas City, and Dallas, and to a slight degree in the Cleveland District, as reported by the Federal Reserve’s September Beige Book, a summary of economic conditions released to the public eight times a year. Overall, the growth was in line with patterns from the late spring and early summer. 

In New York, the economy showed a modest growth. The state’s retail sales from early August out-paced those in July and, overall, retailers recognized steady inventories and prices. However, despite shoppers enjoyment of New York City’s retail offerings, the sales fell short of expectations, as did those along the Canadian border, the latter due to the high exchange rate of U.S.’ strong dollar. 

Summertime tourists made way for Broadway’s theaters in July, helping to boost revenues, but the activity dipped in August, with tourism, in general, side-stepping an impressive seasonal peak. In Manhattan, hotel occupancy and room rates held pace with last year’s tally but they rose in upstate New York, except for the softer Albany region. And, while consumers crowed with confidence in the New York/New Jersey/Pennsylvania region in June, their assurances abated in the late summer.

Good news sparked New York State’s housing market, which built up momentum in the late summer, especially in the construction of new multi-family homes. As well, buyers battled over low inventories through bidding wars in the western region, with home sales and prices rising across the state. Condo and co-op lovers in New York City found prices on those properties up, as well, except at the market’s high end.

Apartments in Brooklyn, Queens and northern New Jersey proved to be choice properties, with increases of 3 percent to 5 percent over last year’s rents. Rates in Manhattan and upstate New York, however, stayed flat, and Manhattan’s low availability began to open, in particular, for new, luxury apartments.

New York State’s commercial real estate markets proved variable, even while rents for office spaces rose in New York City and parts of Long Island. Retail leasing in Manhattan maintained a steady rate, with commercial construction continuing at a healthy pace.

Fortune shined on workers, as the labor market activity strengthened, including an uptick in hiring in New York City, a modest growth in upstate New York’s job market, a faster turnaround on job offers and a push for increased starting wages. Specifically, demand was up for truck drivers, information technology workers, creatives, auditors, accountants and human resource professionals, with many temporary workers hired for permanent positions. Service-sector firms saw an ongoing moderate improvement, although manufacturers realized markedly lower returns and reduced hiring. For both manufacturers and service firms, selling prices held steady. 

Financially, small and medium-sized banks showed increases in loans, most notably for commercial and residential mortgages, with a decline in delinquency loans rates, especially for consumer loans.

While the summer’s mixed bag brought modest gains in New York City and nearby regions, it’s good to know that businesses throughout the state remain optimistic about the coming months. 

Faith Hope Consolo is the chairman of Douglas Elliman’s retail leasing, marketing and sales division, New York, N.Y.