The Real Deal New York

From the April issue: The softening commercial property market contains a small silver lining for investors: Returns on investment are on the rise. Cap rates for Manhattan office properties, the annual rental income from a building divided by its purchase price, plummeted dramatically over the last six years as the market recovered from the aftermath of Sept. 11 and the economy boomed. Investors were willing to buy commercial property with skimpy returns — such as the record 2006 Istithmar purchase of 1.2 million square feet of Class A office space at 280 Park Avenue for $1.2 billion at a 3.6 percent cap rate. That was partly done on expectations that new owners could rapidly squeeze out greater income thanks to skyrocketing office rents.