Manhattan office investment sales to increase

Manhattan office investment sales transaction volume and pricing are expected to increase in 2011, according to a spring Manhattan office and multi-housing capital market report released today by CB Richard Ellis. The first quarter saw Manhattan office building sales transactions rise to eight from three closed deals in the same quarter in 2010 and volume increase from $513.7 million to $1.2 billion. The number of multi-housing transactions remained steady at four. Capitalization rates in Manhattan’s investment sales market also compressed to between 5 percent and 5.5 percent for office buildings, and between 4 percent and 4.5 percent for a prime stabilized multi-housing asset.

“There are fewer choices,” said William Shanahan, vice chairman of CBRE Capital Markets, “putting pressure on what investors have to pay to win buildings.” Shanahan observed that the average loan-to-loan value is about 60 percent compared to 2007, when buyers could borrow 90 to 95 percent of a building’s value.

The average Manhattan office property price rose to $484 per square in the first quarter of 2011 from $482 per square foot in 2010. TRD