Sales of trophy office towers are fast fading from the New York City real estate market. Investment firms have turned their attention to buying residential buildings or looking for partial office-property stakes and off-market deals.
Manhattan has seen four trophy office buildings, including 5 Times Square and 450 Park Avenue, change hands this year, the New York Post reported. That’s a big drop from 2007, when there were 41 office deals totaling $62 billion. Eastdil Secured’s Adam Spies and Douglas Harmon served as brokers on all four of the 2014 deals.
“Most need a local partner, but we have recently seen several that want to buy on their own,” Andrew Scandalios of HFF told the Post. “They are very liquid and aggressive.”
Peter Hauspurg of Eastern Consolidated said skyrocketing prices for development sites has made it difficult to receive comps because contracts were signed about six months prior to closings. He said pricing determines what kind of project a developer will take on. On the residential side, developers of rental and affordable housing properties often lose to those building high-end condominiums.
Some investors are concerned they will miss out on today’s pricing.
“They just want to cash out and relocate, and it makes sense to do it now,” TerraCRG CEO Ofer Cohen told the newspaper. [NYP] — Mark Maurer