The prospect of a fiscal cliff prompted a rash of fourth quarter deals that made up nearly half of all sales in the city last year.
After a year of economic and political question marks, the fourth quarter of 2012 brought approximately $11.1 billion in sales in Manhattan real estate, according to an analysis by Cushman and Wakefield. Q4 activity accounted for 42 percent of the year’s sales total, which is initially estimated at $26.5 billion, surpassing 2011’s $25.8 billion by less than three percent.
The year-end deal-making flurry sparked by the prospect of ‘fiscal cliff’ tax increases came just in time to prevent what would have been the first year of decreased sales volume since 2009.
“My quote is simple: ‘thank goodness for the fourth quarter,’” Steve Kohn, C&W’s president of equity, debt and structured finance, told reporters at the firm’s year-end press conference yesterday (Tuesday).
Notable Q4 deals included RFR Realty’s $261 million purchase 350 Madison Ave in December and Ivanhoe Cambridge’s November purchase of a 49.9 percent interest in 1411 Broadway.
Breaking the comparison down by asset type, sales of multifamily property and development land increased from 2011, while Class A office space sales volume dipped from $9.4 billion in 2011 to $6.8 billion in 2012.
New York’s increase in sales volume between 2011 and 2012 was less than the national average, according to Glenn Rufrano, C&W’s president and chief executive.
However, if a number of significant buildings that failed to sell by year-end had made it to the finish line, the numbers would have been on par, Rufrano said, citing One Worldwide Plaza, 11 Madison Ave. and SL Green’s Tower 45.
Rufrano predicts a whopping 15 percent increase in New York sales volume in 2013, when he expects some of the regulatory and global question marks that plagued 2012 will be resolved. “We don’t know how much uncertainty will be there, but there will be less than in 2012,” Rufrano said.
Q4 also saw a total of 6.4 million square feet of leasing activity, the highest quarterly leasing level this year. The year closed with a total of 23.2 million square feet leased and a vacancy rate of 9.4 percent.
At year-end, the overall average asking rent in Manhattan increased 4.0 percent year-over-year to $59. psf from $57.23 psf. Direct asking rent for Class A Manhattan space, which totaled $70.15 psf at the end of the quarter, surpassed $70 psf for the first time since July 2009.
Midtown South is still the tightest submarket in the country, and net effective rents have increased 70 percent from the fourth quarter of 2010, according to Andrew Sachs, a C&W executive director.
With average asking rents at $49.69, the growing cost of the district could drive midtown south’s traditional creative and media tenants into adjacent neighborhoods in 2013, Sachs said.
