Midtown office property values are now about 10 percent higher than at their pre-crisis peak in 2007, despite fears of a strengthening dollar and a still-shaky global economy, according to new research from Green Street Advisors.
Green Street’s Manhattan Office Price Index shows Midtown property values grew by 1 percent in the month of March, and by about 20 percent over the past year. The index calculates property values based in part on conversations with brokers and real estate executives, which the firm claims allows for a more immediate reflection of property values than closed sales, which tend to reflect prices from several months ago.
“Midtown office values seem poised to continue their upward trend amid strengthening market fundamentals and robust capital flows,” the report states. With bond yields at historic lows, real estate returns are relatively more attractive to investors, the report notes, and this has helped drive the growth.
The report does state, however, that the combination of a strengthening dollar and falling oil prices “warrants monitoring.”
Investors continue to scramble to buy trophy office properties in Midtown. Canadian investment firm Ivanhoe Cambridge, for example, dished out $2.2 billion for the Blackstone Group’s 1.2 million-square-foot office tower 3 Bryant Park, a deal that closed in January. And today, news broke that developers Michael Shvo and Vladislav Doronin are paying $475 million for the majority of the Crown Building at the corner of Fifth Avenue and 57th Street – a deal struck at an impressive $1,724 per square foot.