CB Richard Ellis, the city’s largest real estate brokerage and, arguably, one of the players with the greatest vested interest in seeing the investment sales market recover, says that 2010 is going to rock.
Not only is transaction volume going to ballloon, but cap rates will “compress,” vacancy rates will stabilize, and the United Nations will create world peace.
Here’s the release below:
The Manhattan office investment sales market is experiencing marked improvement according to a new report from CB Richard Ellis (CBRE). CBRE’s analysis shows that average pricing for investment sales of high quality office is increasing, transaction volume is expected to grow, capitalization rates are compressing, and commercial mortgage originations are expected to increase.
The CBRE report projects that cap rates [i.e. the percentage of the net operating income (NOI) of a property to its acquisition cost] will be in the 5.5% to a 6.0% range for a stabilized, prime office asset. This compares favorably to estimated cap rates of between 6.5% to 7.5% for mid-year 2009.
Key findings in this report include:
* Manhattan office investment sales transaction activity and average pricing are expected to increase in 2010.
* Manhattan office cap rates are expected to compress in 2010.
* Manhattan office vacancy is stabilizing after an increase from 4.84% in January 2008 to 9.74% in January 2010.
* Manhattan office average asking rents are stabilizing after decreasing from a high of $71.92 per sq. ft. in July 2008 to $48.78 per sq. ft. in February 2010.
* Commercial mortgage originations are expected to increase. CBRE Debt & Equity Finance professionals report increased interest in market financing transactions.
* There will not be a flood of distressed assets on the market, but rather a mix of loan extensions, loan workouts, loan sales and forced sales.