CBRE top producer Mary Ann Tighe says New York City commercial owners are reluctant to adjust their prices after seven years of positive market growth.
“So many buildings have traded and so many proformas have been reset that there’s a tremendous reluctance to reprice even if there’s a suggestion that you might,” she said, speaking Tuesday on CNBC’s Squawk Box. “Land trades are frozen right now — the seller/buyer expectations are completely out of whack.”
As such, prices remain historically high.
“I would have said to you last year that cap rates couldn’t go lower,” she said. “Average cap rates last year were around 4.5 percent. We’re actually at a lower cap rate in Manhattan this year.”
For a good deal, Tighe says she’s been directing tenants to Third Avenue, where rents have remained more palatable. But the suggestion doesn’t always receive a good reception.
“When people ask me where the bargains are, I say Third Avenue. They’re like, ‘Oh no, not Third Avenue,’” she said. “I think it’s because Third Avenue represents a different era architecturally. Emery Roth, who’s a great architect, built many many buildings along Third. They’re all perfectly good office buildings but what people want today is either new or something that has character and is retrofitted so it feels like it’s new.” — Katherine Clarke