Exec Survey: New York Values at Peak
More than three-quarters of New York commercial real estate executives believe city property values have peaked, reported Marks Paneth LLP, New York.
The accounting firm’s Gotham Commercial Real Estate Monitor said 71 percent of those surveyed believe values have ended their long climb, up from 54 percent six months ago. But only 35 percent said values will now begin to decline, while 36 percent predicted that prices will hold steady. Just more than 20 percent said prices will likely rise further.
Two-thirds of New York real estate executives deemed the city’s real estate “overvalued” compared to property in other major global cities.
Colliers International reported that Manhattan office availability fell to its lowest level in seven years at the end of 2015 and rents in high-tech neighborhoods Midtown South and Downtown broke records. And the next submarkets to heat up will be along the city’s waterfront, said Marks Paneth Real Estate Group Partner-in-Charge William Jennings. “Tech executives and whizzes are certainly a far cry from the longshoremen of yore,” he said. “More proof that New York is always changing itself.”
Nearly 20 percent of executives Marks Paneth surveyed cited Long Island City, Queens, as the neighborhood most favorable to technology businesses. Brooklyn Navy Yard followed closely with 17 percent and Lower Manhattan 15 percent. Brooklyn’s DUMBO (Down Under the Manhattan Bridge Overpass) neighborhood trailed with only four percent–the same number that cited non-waterfront neighborhoods Union Square, SoHo and Midtown East.
Real estate executives remain divided about whether interest rate increases will harm values. Nearly half–46 percent–said property values will decline if the Fed raises interest rates again, while 35 percent predicted that values would hold steady.
The giant Hudson Yards redevelopment project underway in western Manhattan drew mixed reviews from property executives. When completed the project will include nine new office and residential skyscrapers built on a platform over 30 active Long Island Railroad tracks. Nearly 40 percent said they expect the mixed-use development to succeed, while 12 percent predicted challenges. Just under half said only time will tell whether the platform-based development will succeed.
