Average NYC building sale price dropped 45%

http://www.crainsnewyork.com/article/20100126/FREE/100129917 Average NYC building sale price dropped 45% Total value of citywide deals fell 90% from peak of 2007; pick-up in sales volumes expected as more distressed debt hits the market. The dollar value of commercial real estate sales in New York City as a whole plummeted to $6.3 billion last year, down 90% from its peak in 2007, according to a... [more]

http://www.crainsnewyork.com/article/20100126/FREE/100129917 Average NYC building sale price dropped 45% Total value of citywide deals fell 90% from peak of 2007; pick-up in sales volumes expected as more distressed debt hits the market. The dollar value of commercial real estate sales in New York City as a whole plummeted to $6.3 billion last year, down 90% from its peak in 2007, according to a year-end report released Tuesday by Massey Knakal Realty Services. The turnover rate for buildings—the ratio of the number of buildings sold compared to the existing stock of buildings—hit a 25-year low of 0.87% in 2009. During the previous two recessions, the turnover rate fell only as far as 1.6%. Over the last 25 years the average turnover rate has been 2.6%. “The historically low sales volume has been created by supply constraint much more so than by a lack of demand,” said Robert Knakal, chairman of Massey Knakal Realty. “We have also seen few distressed assets come to market.” The highest turnover rates in the city were in Northern Manhattan—specifically the areas north of 96th Street on the east side of Manhattan, and north of 110th Street on the west side. In those areas, the turnover rate was 1.33%. Conversely, Brooklyn had the city's lowest turnover rates last year: 0.73%. Citywide, there were 1,224 transactions in 2009. In Manhattan, the number of transactions plummeted 54% from 2008 levels to a total of 275. That figure was down 68% from the peak hit in 2007. Meanwhile in Brooklyn, the number of sales dropped 57% to 416, or 75% below the 2007 peak. In Queens sales fell to 306, 71% below the peak. Last year, the average sale price of a New York City building was $4.4 million, down 45% from 2008 and fully 65% from the peak. The largest declines in average price took place in Manhattan, where it shriveled by 75% from its peak in 2007, to $12.9 million. The good news is Mr. Knakal believes activity will pick up this year. According to the report, volume rose each quarter in Manhattan last year. He expects the turnover rate to reach 1.6% to 1.7% this year. “We think we are past the bottom in terms of low volume sales,” Mr. Knakal said. “We will see more activity in the distress segment, but not the tsunami that people anticipated. It will come slowly over an extended period of time.” Mr. Knakal estimates that there are 15,000 distressed properties in the city carrying a total of $165 billion in loans. He expects about $30 billion to $40 billion of that to enter the market this year, creating more opportunities for investors. [less]