The Real Deal New York

NYC investment sales decline 25 percent in 3Q: Massey Knakal

Despite drop, year-end total expected to surpass 2010 level

October 18, 2011 12:05PM
By Adam Pincus


Manhattan investment sales by quarter (source: Massey Knakal)

New York City investment sales fell a sharp 25 percent in the third quarter from the prior three-month period, but commercial property trades are still expected to top 2010 activity and reach $24 billion by the end of the year, executives at brokerage firm Massey Knakal Realty Services said.

Total third-quarter sales in the city hit $6.5 billion, down from $8.7 billion in the second quarter of the year, according to figures the company released at its quarterly media briefing in Midtown this morning. For the first nine months of the year, commercial property sales including multi-family, office, retail and development, reached $19.2 billion citywide, the firm reported.

But Robert Knakal, the company’s chairman, did not see the quarterly falloff as a permanent pullback.

“That might be interpreted as a slowdown in the market,” Knakal said. “However, if you eliminate the second quarter [of 2011], the $6.5 billion is the best quarterly total all the way back to the third quarter of 2008.”

Yet he noted that the average price per foot of all property types had slipped in the third quarter from the period earlier. While he declined to provide the actual price per foot figures, he said the figure for the second quarter was 11 percent above the average for 2010. But by the third quarter the average was up only about 6 percent from the 2010 number.

There has been a “slight pullback in value,” Knakal said.

Despite those headwinds, Paul Massey, the company CEO, said an increase in the number of properties trading indicated a broad-based strength in the market.

In Manhattan, there was $5.7 billion in sales, down from $7.9 billion in the second quarter. Some major sales included Colorado-based real estate investment trust UDR’s purchase of 95 Wall Street for $326 million.

James Nelson, a partner at the firm who focuses on Manhattan, said despite an increase in dollar volume in development deals in the borough, the average amount of buildable area in each deal remains small.

There were $440 million in development deals that sold in the third quarter, including 1205-1225 Broadway for $71.9 million.  But the average size was just 85,000 square feet, he said. The third quarter total was more than half the $842 million sold in the first nine months of the year, market figures show.

In Brooklyn, Michael Amirkhanian, director of sales, said small private equity firms were buying properties close to Manhattan in neighborhoods such as Clinton Hill, Bedford Stuyvesant and Williamsburg.

“You are seeing a lot of the small, private equity-type groups look within that 15-minute train ride to the city,” he said.

In Brooklyn, there was $310 million in property sales, down 23 percent from the second quarter, when there was $402 million.

In Queens, there was $236 million in property sales, an increase of 43 percent over the second quarter’s total of $165 million.

In the Bronx and Northern Manhattan, there was a combined $223.8 million in the third quarter, up 28 percent from $174.3 million in the second quarter.

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