Massey Knakal Reports Manhattan Q3 Building Sales Activity

Commercial News » Commercial Real Estate Edition | By Michael Gerrity | October 15, 2009 1:45 PM ET

(News Source: Massey Knakal Realty Services)
(NEW YORK, NY) -- Massey Knakal Realty Services released their exclusive third quarter Manhattan Building Sales Report. This industry leading report provides a comprehensive review of the entire Manhattan investment sales market south of 96th Street east of Central Park and south of 110th Street west of Central Park.

"Through Massey Knakal's Territory System™, each agent continuously tracks all property sales in their region which affords us the ability to provide a detailed analysis by property type (sales volume, median price/sq.ft., turnover rate), and a map pinpointing each sale location," said Kyle Mast, Managing Director of Manhattan for Massey Knakal.

The highlights from the Manhattan report include:

  • There were 207 Manhattan sales in the first three quarters of 2009, which was down 60% from the comparable period in 2008 and down 75% from the peak during the comparable period of 2007.

  • However, it appears that the market has surpassed the bottom in terms of sales volume. Annualizing the 1Q09 sales totals, the turnover was 0.72%.  Annualizing the 1H09 sales, the turnover was 0.90%.  Annualizing the 1Q09-3Q09, the turnover rate was 1.01%; this represents a clear increase in sales activity. In fact, the number of sales in 3Q09 was up 73% compared to just last quarter (2Q09).

  • In the peak period of 1Q07-3Q07, 829 sales represented an annualized turnover of 4%, well above the 25 year average of 2.6% of the total stock of properties. In 1Q08-3Q08, the 528 sales represented an annualized turnover of 2.5%. Thus far in 2009, the 207 sales represent an annual turnover of 1.01%, which is well below the lowest turnover ever recorded of 1.6% in 1992 and 2003, both of which were years at the end of recessionary periods which saw cyclical peaks in unemployment.

  • Median price per square foot was down anywhere from 16% to 62% in 1Q09-3Q09 from peak pricing in 2007 and 2008, depending on property type.  This ranges from a reduction of 16% for multifamily properties to 62% for office buildings.

  • Aggregate sales consideration in 1Q09-3Q09 was approximately $3.2 billion, down 82% from the peak during 1Q08-3Q08 ($18 billion) and down 92% from the peak in 1Q07-3Q07 ($40 billion). 55% of the total aggregate sales consideration for1Q09-3Q09 was office building sales. However, the total number of office building sales made up only 6% of the total number of building sold. Of note, 92% of the buildings sold were below $25M during 1Q09-3Q09 compared to 80% in 1Q08-3Q08.

One trend that Massey Knakal is seeing is that distressed assets are slowly trickling into the market.  Another trend is the demand for property from high net worth individuals and from institutional buyers.  According to Mast, "We believe that this demand, combined with the recent emergence of foreign capital into the market, will increase sales volume and move us out of the slowest period for the building sales market since we started tracking market sales 26 years ago."


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