Avison Young predicts investment sales bubble

TRD New York /
Apr.April 03, 2013 11:45 AM

A crush of large class A buildings for sale in Manhattan could be a sign of a real estate bubble in the making, commercial brokerage Avison Young states in its first-quarter investment sales report, obtained by The Real Deal.

The total dollar volume of New York City commercial real estate sales increased to $8.6 billion from $5.8 billion year-over-year — a 46 percent increase and the best quarterly results since mid-2011, the report states.

Avison Young attributes the increase to the sales of four properties since the beginning of the year — 550 Madison Avenue, 30 Rockefeller Plaza, 237 Park Avenue and 75 Rockefeller Plaza, which total $3.8 billion in dollar volume.

“Over the past 60 days we have started to see a notable uptick in the number of large, class A buildings being put on the market,” Neil Helman, Avison Young’s principal of the firm’s capital markets group said in a statement to TRD. “The persistently low interest-rate environment, coupled with cap rates moving downward and improving rental rates have created a veritable ‘perfect storm’ for sellers.”

The report also pointed out that there was a significant decrease in international investment in Manhattan office properties during the first quarter. Private equity firms remain the leading acquirer of office properties in New York City, while institutional investors trailed in in terms of acquisition activity during the quarter, the report noted. –Hayley Kaplan


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