The Real Deal New York

Investment sales volume could rise by 50%

April 12, 2011 12:36PM
By Adam Pincus

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The first quarter of 2011 saw a steep decline in investment sales in New York
City compared to the last three months of 2010, but the dollar volume for the
whole year is expected to surge over last year, Robert Knakal, chairman of
commercial brokerage Massey Knakal Realty Services, said.

He predicted the total volume of investment sales would jump to as much as $22
billion this year from $14.5 billion in 2010.

“We believe the dollar volume will increase by 40 to 50 percent over 2010 levels,”
Knakal said at the firm’s quarterly press briefing at its Midtown headquarters this
morning. “We are expecting that the total dollar volume is going to be in the $20
[billion] to $22 billion range.”

But that would remain far below the record $62 billion sold in 2007, he said.

In the first quarter of 2010, there were $3.9 billion in sales citywide, down 30
percent from the $5.6 billion sold in the fourth quarter last year.

Knakal blamed some of the decline this year to a surge in sales in the prior
quarter by sellers fearing a change in taxes. But even as the first quarter lagged
the previous three months, it was far more than the first quarter one year ago,
when just $2.03 billion in properties traded hands.

The increase in property sales was led by office buildings purchases, such as
William Macklowe Company and ING Clarion Partners together buying 636 Sixth
Avenue for $45.23 million
.

The development market picked up as well in terms of volume of deals, but fell in
the average price per square foot.

In the first quarter of 2010, there were three deals, including the Drake Hotel site
at 440 Park Avenue at 56th Street, which sold for $509 per square foot to CIM
Group. The average price per square foot for all three deals was $408.

Last quarter, the number of sales increased to 10, with an average price per
square foot of $275. The largest sale was Glenwood Management’s purchase of
49-55 Amsterdam Avenue
for $125 million, or $305 per square foot.

In addition, Knakal said he expects the dollar volume of note sales for all of 2011
to be about $6 billion to $7 billion, about the same as in 2010. But he expects
about 75 percent of the notes to be sold by special servicers, and about 25
percent by banks. Last year, those figures were reversed, with about 75 percent
of notes being sold by banks, and about 25 percent sold by special servicers.

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