In the first quarter of this year New York City commercial property sales totaled $31 billion, a 69 percent increase over the same period of time last year. In fact, according to Real Capital Analytics, office dollar volume alone is up over 300 percent from the first quarter of 2010, with hotel volume also increasing more than 100 percent. While these numbers seem to indicate improving commercial conditions, though, Moody’s director of commercial real estate research, Tad Phillip, believes that declining pricing trends could indicate an “ongoing bottoming process” that may not yet be complete. Distress has accounted for more than a fifth of repeat sales transactions, although the first quarter of this year had shown the lowest numbers yet since 2008 in terms of new distress.
Although the numbers seem a bit ambiguous, investors are still ramping up their demands in NYC, and some analysts believe that the action could spill over into other areas of the country. According to Robert Knackal, head of Massey Knackal Realty Services in the area, commercial sales might rise as much as 50 percent in 2011 alone. Knackal believes that values are also set to increase thanks to low interest rates and increasing levels of investor demand. Many investors both at home and abroad seem to believe that NYC properties are largely immune from the troubles facing the commercial sector in other areas of the country. In many cases historically, this has proved to be true as the area recovers more quickly and appreciates even when the rest of the country stagnates. Do you think that the NYC commercial “recovery” is, in fact, a recovery, and do you think it is a positive sign for the rest of the country?
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