Office buildings and other commercial properties in Manhattan are overvalued, especially compared with commercial real estate in other major global cities, according to a survey of New York real estate executives by accounting firm Marks Paneth & Shron (MP&S).
The majority of property executives surveyed (54 percent) put Manhattan commercial real estate values in the overvalued category. And only 28 percent said it’s fairly valued, according to the Summer 2013 Marks Paneth & Shron Gotham Commercial Real Estate Monitor, an anonymous survey of over 100 New York property executives conducted during June and July.
Industry members have held to this view consistently: Approximately the same percentage of executives polled called Manhattan commercial real estate overvalued in the Winter 2013 Gotham Commercial Real Estate Monitor.
“The view that Manhattan commercial property is overvalued dovetails with perceptions about office leasing prices: Most real estate executives who participated do not believe they’re getting back to pre-recession levels very quickly. It could be that there’s an underlying feeling that foreign investors are inflating values in Manhattan,” said William H. Jennings, Partner-in-Charge of the Real Estate Group at MP&S.
According to the summer 2013 survey results, only 15 percent of New York property executives surveyed think Manhattan office and other commercial leasing prices are returning to 2007 levels now, and only 12 percent believe they will do so in 2014. Thirty-two percent think it will happen in 2016, beyond 2016 or never.
The vast majority of survey respondents (82 percent) say foreign investment has influence on commercial property values in Manhattan, with 47 percent saying it has a great deal of influence.
“The idea that Manhattan real estate is as dependent on the global economy as the local economy is as true now as ever. The question is whether strength or weakness in the global economy makes values in Manhattan rise: The answer is probably, ‘It depends,’” Jennings said.
The Gotham Commercial Real Estate Monitor from Marks Paneth & Shron represents the findings of a survey of over 100 top commercial real estate professionals in the New York City market.
They included owners and managers of commercial property, commercial real estate brokers and agents, and attorneys and accountants specializing in this sector. The inaugural survey was completed in January 2013.
