While New York City’s commercial real estate market continues to recover from the impacts of the coronavirus pandemic, analysts note the lack of big-ticket sales and lower valuations that indicate activity has not returned to pre-pandemic levels. However, the investment sales market for commercial real estate in Manhattan indicated signs of a rebound from April to June of 2021, achieving its strongest quarter since the start of the coronavirus, according to the commercial real estate website Bisnow.com.
During the first quarter of 2021, four Manhattan office buildings were sold, while the second quarter indicated slightly better performance with five office building sales. The office buildings sold for an average price per square foot of $1,039, rising above the pandemic average. The average selling price was still below the pre-pandemic average price-per-square-foot of $1,135.
Across the Manhattan borough, the commercial real estate market completed 51 transactions in the second quarter of 2021, with sales totaling $1.8 billion. The average price per transaction was $35.3 million, down from a pre-pandemic high of $63.2 million in the second quarter of 2019. The largest office sale was the $325M purchase of 635-641 Sixth Ave, which was sold by SL Green to California-based Spear Street Capital.
Manhattan’s residential real estate market is doing better than the commercial sector, as people have migrated back to New York. In the second quarter of 2021, 28 buildings changed ownership. That figure is double the four-quarter average while still below the 39 multi-family building sales logged in the second quarter of 2019.
Even though some evidence of rebound from the low point of the pandemic, commercial real estate industry insiders have expressed concern about the significantly decreased movement of investment capital and the impact on Manhattan's status at the top of the commercial real estate market. Based on investment sales from the first half of 2021, Manhattan is projected to have a lower real estate sales total than 2020, even though the total number of sales is likely to increase from the previous year’s volume. For the past two quarters, Boston, Massachusetts, has surpassed New York as the most liquid real estate market in the country, according to Real Capital Analytics.
Several factors have contributed to the less than robust return of the commercial investment market. For instance, sellers are being patient with the hopes of seeing higher real estate prices as the economy recovers more fully from the pandemic. Tenants are waiting to understand better what the return to work will look like before committing to a long-term lease.
The office building market needs to see higher occupancy rates to recover fully. According to Kastle Systems, a building security firm, New York City office buildings only achieved 21.9 percent occupancy at the end of June 2021, compared to the national average of 32.7 percent.
As values have come down, new types of buyers have emerged in the Manhattan commercial real estate market, including first-time buyers and international buyers who want to use the commercial space rather than invest in the asset class. Experts expect property values to stay down into 2022 as the market takes time to regroup.
During the first quarter of 2021, four Manhattan office buildings were sold, while the second quarter indicated slightly better performance with five office building sales. The office buildings sold for an average price per square foot of $1,039, rising above the pandemic average. The average selling price was still below the pre-pandemic average price-per-square-foot of $1,135.
Across the Manhattan borough, the commercial real estate market completed 51 transactions in the second quarter of 2021, with sales totaling $1.8 billion. The average price per transaction was $35.3 million, down from a pre-pandemic high of $63.2 million in the second quarter of 2019. The largest office sale was the $325M purchase of 635-641 Sixth Ave, which was sold by SL Green to California-based Spear Street Capital.
Manhattan’s residential real estate market is doing better than the commercial sector, as people have migrated back to New York. In the second quarter of 2021, 28 buildings changed ownership. That figure is double the four-quarter average while still below the 39 multi-family building sales logged in the second quarter of 2019.
Even though some evidence of rebound from the low point of the pandemic, commercial real estate industry insiders have expressed concern about the significantly decreased movement of investment capital and the impact on Manhattan's status at the top of the commercial real estate market. Based on investment sales from the first half of 2021, Manhattan is projected to have a lower real estate sales total than 2020, even though the total number of sales is likely to increase from the previous year’s volume. For the past two quarters, Boston, Massachusetts, has surpassed New York as the most liquid real estate market in the country, according to Real Capital Analytics.
Several factors have contributed to the less than robust return of the commercial investment market. For instance, sellers are being patient with the hopes of seeing higher real estate prices as the economy recovers more fully from the pandemic. Tenants are waiting to understand better what the return to work will look like before committing to a long-term lease.
The office building market needs to see higher occupancy rates to recover fully. According to Kastle Systems, a building security firm, New York City office buildings only achieved 21.9 percent occupancy at the end of June 2021, compared to the national average of 32.7 percent.
As values have come down, new types of buyers have emerged in the Manhattan commercial real estate market, including first-time buyers and international buyers who want to use the commercial space rather than invest in the asset class. Experts expect property values to stay down into 2022 as the market takes time to regroup.
