Eastern Consolidated: Manhattan multifamily and commercial sales up in third quarter, but office leasing market still sags

The Manhattan multifamily and commercial sales markets showed signs of improvement in the third quarter of 2009, while the office leasing market continued to be plagued by an increasing inventory of inexpensive sublease space and a shrinking workforce, according to a report released by Eastern Consolidated today.

Sales of multifamily residential buildings in Manhattan increased, to 101 transactions totaling $392 million in the third quarter, from 66 valued at $254 million in the quarter earlier, the report said. The average transaction was valued at $271 per square foot, up from $260 per square foot in the second quarter. For commercial buildings, property sales volume was up to $1.08 billion from $510 million in the quarter earlier, though that number was largely driven by the sale of 825 Eighth Avenue for $605 million and 70 Pine Street/72 Wall Street for $150 million, two large transactions.

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Despite apparent improvements in the market, the $3.2 billion in total commercial sales and the $840 million in total multifamily sales so far this year were each still 92 percent off their respective totals for the same period in 2007, the report noted. Furthermore, for the multifamily sector, the report said the recent ruling on Stuyvesant Town’s rent deregulation will not help usher in further recovery. Landlords in converted rent-stabilized buildings may have to reduce tenants’ rents, driving down both their buildings’ values and possibly, their sales volumes, Eastern Consolidated predicted.

The office market continued to see a decline in asking rents over the last quarter, down to $53.21 per square foot in the third quarter, according to the report. At the beginning of this year, asking rents averaged $62.57 a foot. The steady declines may be partially attributed to an increase in available sublease space. An additional 1.4 million square feet of Manhattan sublease space went on the market in the third quarter, a 3.8 percent increase from the second quarter. There is now 37 percent more sublease space available in Manhattan than there was at the beginning of the year, including 200,000 square feet at 1301 Avenue of the Americas and 107,000 square feet at 199 Water Street. TRD

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