NEW YORK CITY—Despite the maxim that what goes up must go down, a downward shift appears nowhere in site for the New York City market. That was the message conveyed by Cushman & Wakefield Tuesday during a briefing on the first quarter, where severalsurprising turns of the market also were spotlighted.
In the CMBS market, from 2008 to 2010, “economists were forecasting Armageddon in 2015 because they thought that debt wouldn't get refinanced and values wouldn't recover but that hasn't happened," said Garrett Thelander, executive managing director of capital services.
Instead, he noted, “Values are strong and interest rates are low [making refinancing attractive].” His forecast for this year calls for $124 billion in volume. “We're running on all eight cylinders and the wall of capital continues to grow.”
Surprising growth also is being seen in some leasing sectors, adding fuel to the fire of the city's current hot streak, said senior managing director Ken McCarthy. “Financial services—which had been down—is starting to pick up. That's going to be an important sign going forward because if it continues to grow, that's a very good sign, particularly for Midtown, which has been lagging and could pick up rapidly with this sector.”
Further, he added, in good news for the city as a whole, job growth in New York has reached new highs. “We've added about 500,000 jobs since 2009. This is a short time frame and it's more jobs than we've ever gained during a recovery period.”
New York investment sales chairman Bob Knakal was similarly upbeat. The dollar volume of all property trades within the city was nearly $21 billion in the last quarter, putting the market on pace to finish the year at just over $83 billion, marking a staggering 44% increase over last year.
“That's an all time record and a remarkable total,” he said. “We feel very confident that we'll set a new dollar volume record this year, even exceeding the 2007 record.”
A 31 year veteran of real estate brokerage in the city, Knakal noted he is seeing several first time barriers broken. “There are a lot of first time investors in the market and investors who've never left Manhattan are looking at Brooklyn, where values are comparible. Many assets—across all property types—also are selling at over $1,000 per square foot now due to the impact of some retail property sales. It used to be that $500 per square foot was impressive but that's been left in the dust.”
Meanwhile, Adrian Mercado, VP of research, is seeing steadiness and growth potential in an unlikely borough: the Bronx.
In the price per square foot metric, the Bronx beat out all boroughs with a 13% increase over last year, compared to a 5% to 7% jump. Some transactions in the Bronx have been done in the $90 range whereas the norm for the borough is $40-$50 per square foot.
“The Bronx is holding steady,” he said, “and while it may be unsexy, the borough probably will be one of the leading markets in 2015.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
