Comparatively few owners are selling properties at the moment, and those that do are "not as pressured" as might be expected in an era of rising distress, said Joshua Zamir, managing partner of Capstone Equities. "They're only selling because a broker told them, 'I can get you a sub-6% cap rate,'" Zamir commented.
A lack of capital isn't the problem, said Zamir, who observed that there's "tons of money out there and no place to put it." Capstone did figure in one of the few large transactions of late: the purchase of the 1.1-million-square-foot office property at 4 New York Plaza, reportedly for $107 million, in a partnership with Norfolk, VA-based the Harbor Group. Eric Gural, executive managing director at Newmark Knight Frank, said "the idea that there's no financing out there is wrong. There's no financing at 90% anymore, but those types of loans should never have been made."
Zamir pointed out to the beginnings of a comeback for the securitization market. Toward the end of 2009, he said, there were three single-borrower CMBS deals. Now, he said, the first multi-borrower deal in two years—Keystone Property Group's $53.5-million refinancing last month of a Pittsburgh-area office property—offers "a good sign for the market."
Another positive sign cited by Zamir was the difference between February '09 and last month when it comes to negative absorption of office space. A year ago, it was three million square feet for Midtown, he said; last month it was 50,000 square feet. Downtown, where much of Capstone's portfolio is concentrated, not all of the space that will be given back by Goldman Sachs, Merrill Lynch and other financial services giants will come onto the market, Zamir said.
But any positive absorption in the market doesn't mean that rents will start climbing again any time soon, Gural warned. "Our industry is based on jobs, and we haven't really had any positive job growth in the city," he said. The well-attended presentation, the first breakfast event to be held by the recently-formed NAIOP chapter, was moderated by Michael Stoler.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
