Never Mind the Trophies—What About the Other Office Sales?
Eastern Consolidated recently released a report noting that New York office property trades have more than doubled during the second quarter to $4.3 billion, leading us to wonder if the investment-sales market, at least for office properties, really has come back.
But then we noticed something: Major firms with major deals on massive office towers dominate the list, with individual buys valued at hundreds of millions of dollars (which would contribute heftily to that $4.3 billion total). Not surprising, but it makes us wonder how the rest of the market is doing.
The big guys like Paramount Group, with its $980 million purchase of the remaining stake at 1633 Broadway, top Eastern’s list because they can afford it—they’ve earned the financing or they have enormous capital reserves via shareholders or stakeholders. Take away the five biggest deals in the report, in fact, and the $4.3 billion total turns into about $1.422 billion. Not a bad amount, but not 2007 good.
Another part of the report worth noting is a graphic that illustrates office property sales have overtaken sales for other commercial property (whereas the trend for the past two quarters has been just the opposite). Also, both categories have made significant gains compared to previous quarters this year and last.