Colliers Report: Manhattan Office Sales Market
--Pent-up demand, record levels of capital, profit taking, low interest rates
drive square foot pricing and volume--
NEW YORK, OCTOBER 15, 2013 – Rebounding after five years, the Manhattan office property sales market reached $866/sf as of the end of the third quarter. If 2013 closes at or above this level, it would register as the all-time highest single-year average price per square foot for Manhattan office property sales, according to new research from Colliers International.
In addition, assuming that momentum in the Manhattan sales market does not stall as a result of the political stalemate in Washington, DC, total transaction volume for calendar year 2013 has a chance of exceeding $20 billion, which would place the aggregate value as one of the largest office property sales years ever, second only to 2007, at $30.3 billion.
At the close of the third quarter, the Manhattan office property sales market registered 36 transactions totaling a healthy $11.2 billion, with an average transaction size of $310 million, driven by a combination of multiple factors, including: pent-up investor demand, record levels of available debt financing and equity capital, profit taking, and a low-interest rate environment.
The year-to-date Manhattan office property sales market has been dominated by core office properties, including: the $1.36 billion, 40 percent sale of the GM Building at 767 Fifth Avenue for $1,890/sf; the $858 million sale of a 49 percent interest in the News Corp. Building at 1211 Avenue of the America for $900/sf; and the $385 million sale of 499 Park Avenue for $1,285/sf.
Another $5 billion worth of Manhattan office sales are currently under contract and are expected to close by year end, including the $694 million sale of a 49.5 percent interest in 7 Times Square for $1,170/sf, and the $725 million sale of 1345 Avenue of the Americas for $725/sf. Additional core properties are being marketed with the potential to close this year.
“Pricing for Manhattan office properties will continue to push towards record territory,” said James Murphy, Executive Managing Director in Colliers International’s Investment Services Group. “Overall Manhattan office rents have come back over the last two years, and investor confidence rests at a five-year high. Investors are projecting continued healthy rent growth and are making investment decisions accordingly.”
The Colliers International research also shows that, year-to-date:
- Average Manhattan Class A property sales have averaged $990/sf (the highest all-time mark)
- Average Midtown Class A property sales have averaged $1,123/sf (the highest all-time mark)
- Average Midtown North Class A property sales have averaged $1,128/sf
- Average Midtown Class B property sales have averaged $631/sf (the highest all-time mark)
- Average Manhattan office property sale transaction has averaged $310 million, which ranks third all-time behind $446 million in 2007 and $413 million in 2008.
ABOUT COLLIERS INTERNATIONAL
Colliers International is a global leader in commercial real estate services, with over 13,500 professionals operating out of more than 482 offices in 62 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world.
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