The Real Deal New York

Manhattan investment sales slowed toward end of 2011: Massey Knakal

Firm expects supply to grow as much as 30 percent in 2012
By Adam Pincus | January 17, 2012 11:00AM

Manhattan investment sales last year declined as the year wore on as sellers decided not to place properties on the market, even as the total amount sold far outpaced 2010, executives at investment firm Massey Knakal Realty Services said.

There were $21.7 million in investment property trades in 2011, up 87 percent from the $12 billion in 2010. But investment sales in the fourth quarter were just $5 billion, down from the $6.1 billion in the third quarter and $8 billion in the second quarter, the firm reported at a year-end market briefing this morning.

But Robert Knakal, company chairman, said the decline in investment sales was not a signal of market weakness; instead it was reluctance by sellers to put properties on the market, which would turn around sharply this year.

“If you look at the numbers annually, they are great. If you look at the numbers quarterly they are okay to good,” he said. “But if you look at the monthly numbers they are fair.”

Knakal said the overall value of New York City properties rose modestly in 2011, with the average price per foot rising by 6 percent over 2010. Yet that small increase held sellers back, he said.

“That was not enough to stimulate sellers coming to market,” he said.

But in some places, Manhattan was hitting pricing highs, James Nelson, a partner at the firm, said. He pointed to properties such as the retail condo at 747 Madison Avenue, which SL Green Realty and Jeff Sutton bought for $66.25 million, or a record retail price of $9,989 per square foot.

For New York City overall, there were $25.7 billion in investment sales in 2011, up 80 percent from the $14.2 billion in 2010. But sales in 2010 remained below the seven-year average of $30 billion, the company reported.

Looking ahead, Knakal expected more sellers to jump into the market this year. He predicted the city-wide supply would increase by 25 percent to 30 percent, in part driven by prices that in some sectors, like land, will rise sharply. He said land prices would jump by about 20 percent to 30 percent, and retail values would rise by about 25 percent.