Brief History of Manhattan Land Prices

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Jason Barr, an urban economist at Rutgers University, created an interesting index that measures the price of Manhattan land from 1866 to 2013, using data on sales of vacant land. In the four decades following the Civil War, NYC emerged as the economic capital of the U.S. And as Barr’s index reveals, rapid business and population growth boosted the price of land and spurred the construction of the city’s first skyscrapers. And between 1900 and 1930, Manhattan land prices rose to a new record, though prices took a significant dip during and following WWI. During the Great Depression and WWII, prices again dropped, rose during the 1950s postwar boom and then declined again during the 1970s due to the city’s economic decline. According to Barr, Manhattan land prices in 1977 had sunk to 1880 levels.

That was the end of the bottom. Since 1977, Manhattan has seen the fastest and most prolonged period of land price growth ever. Between 1977 and 1988, and between 1993 and 2007, annual growth averaged 24 percent!

So what happened after 1977 that caused land prices to grow so quickly? Zoning. As Cushman & Wakefield’s Bob Knakal explains to The Real Deal: “When zoning came in, all of a sudden you had restrictions on use and restrictions on bulk. What that led to was scarcity. The combination of scarcity and location drove land values up.”

In addition to zoning, The Real Deal cites two global explanations for why Manhattan land prices have been rising so quickly since the 1970s: fewer advances in transportation and construction technology and increasing wealth concentration.