Manhattan Transaction Volume Falls

Investment property sales dollar volume in core Manhattan fell 41 percent year-over-year to $23 billion in 2017–the lowest since 2010–reported Eastern Consolidated, New York.

Sales totaled $14 billion in 2010.

“The slowdown is a reflection of a turning market, and when a market turns there tends to be a lull in sales activity as buyers and sellers adjust their expectations,” said Eastern Consolidated Chairman and CEO Peter Hauspurg.

Bloomberg News reported on Feb. 27 that some New York property owners now confront demands from retail tenants “once unheard of in Manhattan, from rent reductions to short-term leases.”

JLL Vice Chairman Patrick Smith told Bloomberg landlords are “adjusting the way they do business to market conditions.”

Property owners with mortgages face a challenge of needing to repay a loan with less income from the property, Bloomberg said. But Smith noted most lenders are willing to work with the owner. “When you have a market where the conditions are uncertain, the idea of taking a property back is not the best scenario,” he told Bloomberg.

Eastern Consolidated said New York saw a “significant retrenchment” from international investors as countries that recorded more than $1 billion in 2016 sales pulled back in 2017. Chinese buyers invested $2.5 billion in Manhattan commercial real estate last year, down 62 percent from 2016, and German buyers invested $838 million, down 64 percent.

Despite the pullback, international buyers accounted for more than one-third of Manhattan property sales in 2017, down from 42 percent in 2016, the report noted. Real estate investment trusts increased their market share to 15 percent, up from 3 percent in 2016, while institutional buyers accounted for 19 percent of sales, down 28 percent from 2016.

Eastern Consolidated said New York’s Midtown West neighborhood generated the highest dollar volume in Manhattan for the second year with $5.1 billion in 2017 sales. Large trades included partial-interest investments in two office properties, 825 Eighth Avenue and 1515 Broadway.

The West Village and Chelsea neighborhoods actually attracted more investment dollars in 2017 than 2016, the report said. The West Village registered a 146 percent increase in dollar volume to $1.16 billion and Chelsea showed an 8 percent dollar-volume increase to $2.1 billion. Other Manhattan neighborhoods posted year-over-year declines.