Just when you thought New York City’s commercial real estate prices could have already reached their peak, 2015 proved to be a blockbuster year, especially in Manhattan. This is very apparent when looking at the multifamily sector, both condos and apartments.
At the exclusive One57 tower in Midtown, there was a deal last year for just under $100.5 million, taking up two floors in the high rise. It was the highest residential price paid in NYC. The building also experienced a handful of transactions in the $50-million range. And these are just examples for ONE ASSET… Many transactions for individual multifamily units in Manhattan soared into the tens of millions last year in several other locations.
Examples of full-building sales are even more spectacular, and several of these New York locations are trading for $1 billion or more, most of them trophy office towers. One of the craziest recent deals was the sale of a DoubleTree Times Square hotel for $540 million. That’s right. A DoubleTree. We aren’t talking a W hotel or even a Sheraton. Brands aside, this is obviously a super-prime location, and the developer envisions transforming it into a mixed-use development that will include retail and entertainment.
Overall property values soared in New York City last year, hitting $1.072 trillion, a 10.6-percent jump from 2014.
So how long can this last?
A group of leading New York City commercial real estate brokers recently said that there is no reason to think it wouldn’t continue, or at least, they don’t see the market going South. In the office sector, it was agreed that it is a landlord’s market, and rents could shoot up more this year.
However, in the same article, Michael Cohen of Colliers International surmised that retail real estate rents might have already reached their peaks.
Another trend is that the office sector could see a continued migration of tenants to Brooklyn, for cheaper rents and the “cool” factor that many companies perceive their employees seek. Additionally, it seems as though the financial sector currently has more stability than in previous years, and creative firms, such as advertising and media outlets are expanding.
So, there is little evidence we could find of things going on a downward spiral. The next few months will tell if things will cool off or remain at this hot rate. What do you think?