The Manhattan investment sales market typically serves as a lead indicator for the sales market citywide, and in the first quarter of 2013, it was once again.
The Manhattan submarket (defined as south of 96th Street on the East Side and south of 110th Street on the West Side) led the way in the first quarter of 2013 with $5.5 billion in investment sales transactions. This represented 85 percent of the $6.5 billion citywide total. Read More
The first quarter of 2013 saw investment sales activity slow down, leaving many in the industry unhappy and frustrated.
However, we were all feeling great in 2011—and that year’s pace is what 2013 resembles so far.
As we anticipated at the end of 2012, the spike in sales activity caused by capital gains tax policy last year has led to a slowdown in activity this year.
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I received many emails and calls about the last sentence of last week’s column. That sentence read, “Low rates have been the rocket fuel for a sales market that is currently white-hot and, as long as rates continue to stay low, will continue to be, notwithstanding that this condition is completely artificial.”
Many of the responses contained examples of how fundamentals have rebounded and how the recovery in the commercial real estate sales market is based upon much more than a low interest rate environment. Many comments also revolved around how we are in a new normal in which interest rates are low and will stay low for years and years.
Last Friday’s jobs report was yet another indication of weakness in the broader economy as our sluggish recovery continues to be uneven and lackluster. The silver lining of this news for those of us in the commercial real estate investment sales arena, however, is tangible. More on that later.
In March, the economy added just 88,000 net new jobs, a disappointing result from almost every perspective. The consensus among economists was that 190,000 jobs would be added, on the heels of 268,000 net new jobs in February. Unfortunately, the result in March was less than one-third of February’s total and the lowest monthly result in almost a year. It also reversed the recent trend of incremental monthly improvement. Read More
The New York City commercial real estate investment sales market is on fire. Demand is outpacing supply by a wide margin, and historically low interest rates have provided the rocket fuel for a seller’s market unlike anything we have seen since 2006-2007.
Almost all product types in all neighborhoods have seen average prices per square foot recently exceed the peaks achieved during the last cycle.
The one notable exception is Midtown office buildings, a fact that sends a very profound message. I have been writing since late 2007, and in that time there has never been a period in which the relationships between politics, economics and real estate have been more closely tied. Poor economic policy and policy overreaction to the great recession have created a broader economy that is simply limping along. Coming out of a recession as deep as the one we recently suffered should result in gross domestic product growth of up to 6 percent annually. We have been at less than one-third of that. Read More
The title of this piece is somewhat true when it comes to the foreign capital that is being poured into our local real estate investment market. If Paul Revere had been a real estate broker, today he would be saying, “The Chinese are coming … The Chinese are coming.”
Investors from China and many other countries have been scouring the city looking for investment and development properties that meet their criteria. Read More
Without a doubt, December 2012 will be remembered as an epic month in the history of property sales in New York City.
In December alone, there were 984 properties sold totaling $11.8 billion. This monthly total is nearly double the entire year’s dollar volume in 2009. It is also the highest monthly total, in both number of properties sold and dollar volume, since we began tracking the market in 1984. Read More
During the depths of the recession, many real estate brokerage companies cut budgets and cut them severely. Some of these cuts ranged from 25 percent to as much as 50 percent. For other companies, the cuts were a more modest 10 to 20 percent. In almost all cases, these cuts allowed companies to weather the storm and come back as the market recovered. Most made cuts of items that were nonessential. These were things that might have been nice to have, or in some cases somewhat important, but were not crucial for the ongoing performance of the company’s operation. Read More
The land rush is on.
And along with the pandemonium in the development site market comes values that are rising rapidly. All of this activity points toward a palpable optimism from developers about the future of New York City. Read More
One of the most prominent needs in the New York City real estate market is affordable housing.
With the expected growth in our population over the next couple of decades, it is imperative that work-force housing exist. This is housing for police officers, firemen, teachers and the scores of other workers who make this city run. An insufficient supply of affordable housing for these folks is a critical issue for the economic well-being of the city that future local administrations will have to address.
Most of our elected officials continually, and inaccurately, refer to our rent-regulation system an “affordable housing” program. Rent control and rent stabilization do not create affordable units as options for our current work force. Read More
The Brooklyn commercial real estate market is on fire.
Demand for properties in the borough is at an all-time high, and many neighborhoods in Brooklyn are rivaling some Manhattan neighborhoods in terms of value and desirability. Today, many young people moving to New York City are choosing Brooklyn over Manhattan, and their motivation is not simply based on affordability. For teenagers and those in their 20s who live in Manhattan, partying in their own borough is passé. They want to go to Brooklyn, which is now widely considered the hipper of the two boroughs. Read More
For those of us who work in New York City’s commercial real estate market, the strength of the city, in terms of its ability to attract new residents, relocating or newly formed businesses, tourists, and both foreign and domestic capital, is something we should be thankful for each and every day.
When we compare New York with other major cities across the nation, or across the globe, the Big Apple always shines.
How often do we hear colleagues within the industry convey how happy they are to be here, as opposed to anywhere else?
A big part of why the city is what it is today, is as strong as it is, as bold as it is and as attractive as it is, can be chalked up to Ed Koch. Last week the mayor passed away, presenting an opportunity to reflect on a man who laid some important groundwork for the future of the city and provided a playbook from which we wish current politicians, in Albany as well as Washington, would steal a few pages. Read More
Economics 101 teaches us that the more expensive it is to do something, the less it happens. Conversely, the less expensive doing something is, the more of that activity occurs. The 2012 investment sales market very clearly illustrates this cornerstone of economic theory.
In the case of New York’s sales market last year, it was more the threat that selling would be more expensive in 2013 that drove hundreds of sellers into the marketplace. Read More
If you are a regular reader of Concrete Thoughts, you know that I think networking is extremely valuable for participants in our commercial real estate market.
One of the main benefits of networking is getting to meet people face-to-face and developing relationships that are lasting and lead to business opportunities. One of the best trade organizations through which to network is the Real Estate Board of New York.
This week, REBNY is holding its 117th annual banquet, so I thought it appropriate to recognize the tremendous work that the board does on behalf of our industry. Not only does REBNY provide tremendous networking opportunities, it’s also a leading advocate for our industry. Read More
What a great year 2012 was for New York City’s investment sales business! While the final statistics won’t be available for a couple more weeks, I’m sure participants in the sales sector of the market will look back on the year as one of the great ones.
The fourth quarter of 2012 was, indeed, the fast and furious ride that was expected as far back as January of last year. I wrote a letter to thousands of property owners during the first week of January 2012 alerting them to the fact that the Bush-era tax cuts were set to expire at the end of the year and that a substantial increase in capital gains tax rates would tangibly impact after-tax proceeds of a sale (several times throughout the year, these potential dynamics were detailed in this very column. For instance, my Jan. 3 column was titled “Capital Gains Taxes: The Market’s Biggest Concern”). Read More
