As price per buildable square foot drops, development sales market climbs
By Jotham Sederstrom February 14, 2012 12:30 pm
reprintsIn 2009, the number of sites sold evaporated to just 11, a 94 percent drop. Of these 11 sites sold, eight were purchased by users who purchased the land for the construction of facilities for their own occupancy. The result was that just 416,000 buildable square feet were sold for a total of approximately $180 million. The result, notwithstanding the miniscule volume, was a healthy average price paid per buildable square foot of $374 (not a weighted average). Essentially, sellers pulled the trigger only if they got their price.
In 2010, activity picked up significantly with 41 sites sold. These sites contained a total of about two million buildable square feet, which sold for an aggregate price of about $715 million. These sales resulted in an average price paid per buildable square foot of $326.
Last year, the land sales market gained tremendous traction with 95 sites selling. These sites contained a total of about 4.5 million buildable square feet with an aggregate price tag of about $1.4 billion. The average selling price of this land was $311.
It is important to note that the averages presented here are for all land sales, including those for retail, office, hotel, residential and institutional uses. The value of each of these subsets is different; therefore, applying the average to any particular site may derive a misleading result.
From a macro perspective, we have seen what appears to be a drop in the average price paid for land in Manhattan. However, when we look at volume trends closely and really understand the market dynamics, we see that the land market is healthier than it has been in several years, and we expect this positive trend to continue.
rknakal@masseyknakal.com
Robert Knakal is the chairman and founding partner of Massey Knakal Realty Services and in his career has brokered the sale of more than 1,175 properties, having a market value in excess of $7.8 billion.
