Manhattan Commercial Properties are Overvalued

Posted on 17 August, 2013 by Jodee Redmond

Commercial properties and office buildings in Manhattan are overvalued, compared with commercial real estate in other major global cities, according to the results of a survey conducted by accounting firm Marks Paneth & Shron (MP&S). Most of the New York property executives who participated (54 per cent) said Manhattan was overvalued, and only 28 per cent placed it in the fairly valued category, according to the Summer 2013 MP&S Gotham Commercial Real Estate Monitor.

Over 100 property executives shared their opinions anonymously during June and July. Industry members have stuck to this view consistently. The same percentage of respondents polled for the Winter 2013 Gotham Commercial Real Estate Monitor called Manhattan real estate overvalued.

Most real estate executives who participated in the survey do not believe that the market is getting back to pre-recession levels quickly. According to William H. Jennings, the Partner-in-Charge of the Real Estate Group at MP&S, there may be an underlying feeling that foreign investors are inflating property values in that part of the City.

Summer 2013 Survey Results

  • Approximately 15 per cent of New York property executives think that Manhattan office and commercial property leasing prices are heading toward 2007 levels now.
  • Only 12 per cent believe they will reach that level in 2014. Thirty-two per cent of respondents said it would happen in 2016, beyond the year 2016, or never.
  • The majority of respondents (82 per cent) say foreign investment does have an influence on commercial property values in Manhattan. Almost half of those surveyed (47 per cent) said it had a good deal of influence.

The results indicate that Manhattan real estate is dependent on the global economy as well as the local one. Mr. Jennings went on to comment recently that the question is whether the strength or weakness in the global economy makes values in Manhattan increase. The answer is likely that, “It depends.”




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