From the August issue: Manhattan’s residential real estate market might be feeling serious
pain, but many real estate insiders believe the city’s commercial
market will spend a much longer period in the doldrums.
While residential real estate is suffering from an oversupply of
inventory and a bursting price bubble largely spurred by a drop in
lending standards, commercial real estate is confronting obstacles on
the debt side that appear to be more entrenched. What’s more, experts
say the problems on the commercial side are in many ways just getting
started and will require far longer to sort themselves out.
For one, Manhattan’s office vacancy rate last month was 13.1
percent, and the commercial brokerage Colliers ABR is predicting it may
hit a high of 18 percent, significantly higher than the last downturn,
said Richard Bernstein, a vice chairman at the firm.
Lawrence Longua, a clinical associate professor with New York
University’s Real Estate Institute, said history has shown that the
commercial market typically takes longer to recover than the
residential sector in a recession.
