The results of a recent survey conducted by accounting firm Marks Paneth reveal that the majority of New York property executives feel that commercial real estate values are cresting.
More than half (54 per cent) of the executives surveyed said that commercial property values have reached the pinnacle of their climb, while close to one-quarter (22 per cent) stated commercial property values will start declining.
These results are taken from the Spring 2015 Gotham Commercial Real Estate Monitor. The survey was completed in March by more than 100 New York commercial property owners, agents, brokers, accountants, engineers, and lawyers specialising in the commercial sector.
Just over one quarter (26 per cent) of executives say that Manhattan commercial real estate is “highly overrated”, while close to half (48 per cent) are of the opinion it is “moderately overvalued.” In January 2013, only eight per cent of executives surveyed felt that Manhattan commercial property was highly overvalued.
A full sixty-one per cent of survey respondents stated that now is a good time for Manhattan real estate holders to sell one or more of their holdings to maximize profits. Over half (55 per cent) advise that it’s a good idea to hold onto commercial property in the Bronx for the time being and 56 per cent are of the same opinion about property located in Queens.
According to figures released by CBRE, Manhattan’s office leasing activity equaled 3.02 million sq ft in April, which was 37 per cent higher than the five-year monthly average of 2.21 million sq ft. The average asking rent at the end of the month was $68.54 per sq ft, an increase of five per cent from the $66.04 on average reported 12 months ago.
Leasing activity in midtown Manhattan in April 2015 was 2.41 million sq ft, an increase of 79 per cent above the five-year monthly average of 1.34 million sq ft and a full 49 per cent higher than March leasing rates. It was the strongest month for leasing since April 2013, when monthly leasing hit 2.13 million sq ft. Year-to-date leasing is 21 per cent higher at 6.93 million sq ft.
Midtown South’s office market leasing activity in April totalled 367,000 sq ft, a dip of 14 per cent below the five-year monthly average of 427,000 sq ft. These figures represent the twelfth consecutive month where average leasing activity was above 300,000 sq ft. The year to date leasing dipped 10 per cent from the same period previous year, siting at 1.76 million sq ft.
Downtown Manhattan’s leasing activity for April of this year was 250,000 sq ft, 43 percent lower than the area’s historical average of 440,000 sq ft. It represented the first time since October 2014, monthly leasing dropped below the 300,000 sq ft level. All of the top five transactions in April were either new leases or commitments for expansion. April rents dropped slightly to close out the month at $56.75, compared to $56.94 in March; this rate was up 16 per cent from the previous year.
