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City investment sales on course to hit $76B this year

Investment sales transactions in New York City reached $16.8 billion in the second quarter of this year, the fourth highest quarterly figure on record.

According to Cushman & Wakefield’s second quarter property sales report, dollar volume is on pace to reach $75.6 billion this year, which would represent a 22 percent increase from the previous record set in 2007.

BOB KNAKAL
BOB KNAKAL

“In the first half of 2015, the New York City investment sales market continued to roll along and it is on pace for an all-time record in dollar volume of sales as values are at all-time highs for every property type in every neighborhood,” said Bob Knakal, Cushman & Wakefield’s chairman for New York investment sales.

In spite of the rapid pace of deals in the city, the second quarter numbers represent a sharp drop from the transaction dollar volume from the previous three months.

During the first quarter of this year, dollar volume reached a record high of $20.8 billion.

For the quarter, Manhattan accounted for $12.8 billion in total sales, with the number of properties sold going down by 26 percent compared to the previous quarter.

Brooklyn, meanwhile, recorded $4.5 billion in sales, with the number of properties sold declining by six percent compared to the previous quarter.

BRENDAN MADDIGAN
BRENDAN MADDIGAN

Two transactions in the Williamsburg area buoyed Brooklyn figures. 116 Bedford Avenue was sold for $5.2 million, or about $945 per s/f. The price garnered the convoluted distinction of being the highest ever for an eight-family walk-up building. 210 Bedford, on the other hand, was sold for $6.75 million, or about $2,689 per s/f. The transaction registered the highest price per s/f of any building in the borough. “The market has never been stronger, so the interest in our listings is huge, but also there is a larger gap between where investors see value, which presents challenges to the sales process,” said Cushman & Wakefield broker Brendan Maddigan, who represented the sellers in both transactions.

The office space market, particularly the trophy building segment, is also generating large profits.

According to Jones Lang LaSalle’s 2015 Digital Skyline Review, trophy office towers cost 21 percent more to rent than their non-trophy counterparts.

The average rate for trophy buildings in Manhattan was at $80.54 per s/f. The expensive trophy office towers can be found in the Plaza District ($107 per s/f) and near Central Park ($146 per s/f).

TRISTAN ASHBY
TRISTAN ASHBY

“New York continues to attract both capital and talent from around the world, and this trend shows no sign of tapering off,” said Tristan Ashby, JLL’s vice president and director of research in New York. “And while in an active phase, construction of new office space in Manhattan is lengthy, expensive and ultimately limited by available sites.”

According to JLL, the price hike coincided with the reduction of inventory in some of Manhattan’s most desirable areas. Trophy vacancy in Midtown is at 8.4 percent, 1.6 percent lower than the overall vacancy rate in the neighborhood.

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