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NYC investment sales dip may persist as fall closes in

After reaching record highs, New York City’s investment sales market continues to slow down, leaving industry insiders torn between caution and optimism.

Photo by Malinda Rathnayake/ Flickr
Photo by Malinda Rathnayake/ Flickr

“It’s very expensive right now. It’s hard to find any large deals,” said Joshua Arcus, the president of real estate firm Siderow Organization.

“We’re optimistic. If there are a couple of bumps on the road, that happens on any given cycle. But we think that there’s still room to run in this market,” added Michael Tortorici, the executive vice president for sales operations at Ariel Property Advisors.

According to a recent REBNY report, the city’s investment sales market has posted significant declines in both sales consideration and transaction volume. During the first half of the year, the value of completed deals across the city dropped by 20 percent to $29.5 billion. Meanwhile, the number of transactions decreased by 19 percent to 2,581.

Bob Knakal, the chairman of New York Investment Sales at Cushman & Wakefield, agreed that there has been a decline. However, he said that the numbers aren’t “quite on point.” “So far this year, citywide dollar volume in the first half was $31.5 billion. Annualizing that, we get $63.1 billion, which would be down about 18 percent from last year’s total. The number of properties sold so far this year is 2,257, which if annualized would be down 13 percent from last `year. But last year was the peak year in terms of dollar volume at about $77 billion. 2014 was the peak in terms of number of properties sold,” he said.

Knakal added that the city’s investment sales market is undergoing a correction brought on by a natural market cycle. “We’re ten months into a correction in the sales market,” he said, adding that the value of land and hotels started dropping in September and October of last year.

Arcus said that the squeeze is more evident for small-scale investors, leaving even established players out in the cold. “There are less deals that make sense for a small-scale person,” he said. “If you’re looking at stuff under $4 million, there might be certain opportunities here and there as long as you’re willing to roll up your sleeves and do a little bit of work to make the deal work for you. Ultimately, the landscape right now is such that even very seasoned players in the market are finding it hard to find deals.”

According to Knakal, there is no catalyst event behind the city’s investment sales drop. However, he expects the dip to persist. “There are two issues: it’s how long and how deep. I sense that similar to the way that the recovery was long drawn out and mediocre, the correction can be long drawn out and mediocre as well,” he said.

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