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GlobeSt.com EXCLUSIVE: Explaining Office Market Investment Explosion

NEW YORK CITY-The third quarter has proven to have the highest quarterly transaction volume recorded during the last eight quarters, while mall investment activity continued at a frenetic pace.

By Barbara Jarvie | Updated on October 03, 2003

NEW YORK CITY-There has been an office investment activity explosion during the third quarter of this year. Big-ticket trophy assets picked up during the quarter such as the GM Building were just part of the 162 domestic office transactions with an aggregate value of $11.7 billion that Granite Partners LLC tracked. This is the highest quarterly transaction volume recorded during the past eight quarters, and appears to have offset a comparative decline in investment activity that was recorded during the second quarter. And Granite’s managing director and partner Arthur Milston says the year-end 2003 investment volume appears to be on pace to equal the $36 billion achieved during 2002.

“It’s not a great surprise,” he tells GlobeSt.com. “There is a continued flight to quality.”

New York, Los Angeles–including Orange County–Boston, Chicago and Washington, DC continue to account for the majority of all office investment activity nationally. According to Granite, these five markets accounted for 59% of all investment activity year-to-date 2003, which is a significant increase above 2002, when these same markets accounted for 53% of all investment volume. However, two transactions skewed the statistics for total investment volume recorded year-to-date. The recent sale of the GM building and the sale of the John Hancock portfolio in Boston earlier in the year accounted for $2.3 billion, or 8.8% of the $26.1 billion of total transaction volume recorded during the first three quarters of 2003.

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