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Property Values Drop as Much as 7% After 9/11

NEW YORK CITY-According to newly released statistics, a serious--and downward--revaluation of commercial properties has taken place since the terrorist attacks of Sept. 11. Real Capital Analytics--GlobeSt.com's latest MarketData provider--reports that October sales volume was less than half of what it would be for a typical year-end rush.

By John Salustri | Updated on November 27, 2001

NEW YORK CITY-October witnessed investment activity that was less than half of traditional year-end volume, a direct result of the wait-and-see position the industry has assumed in the aftermath of Sept. 11. In statistics recently unveiled by locally based market research firm Real Capital Analytics, the post-attack cutback in volume is heaped upon an already slowing marketplace, guaranteeing that year-end 2001 will pale in comparison to 2000.

A total of $62 billion deals have closed or gone to contract year to date, according to Real Capital, with most of that ($15.9 billion) occurring in the suburban office sector. Some $14.4 billion worth of apartments changed hands, while $13.6 billion worth of CBD office assets were sold. Flex office and retail brought up the rear with $9.9 billion and $8.2 billion respectively.

The downturn in volume is probably good news for owners who have opted to ride out the storm until values improve. Indeed, according to Real Capital, values–already slipping in the recession, fell another 5% to 7% in the wake of the attacks as initial yields on acquisitions increased as much as 30 basis points over pre-attack levels.

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