According to a report issued today by Massey Knakal Realty Services, "Annualized sales figures suggest that 2009 will see a 59 percent decline in total dollar sales volume and a 68 percent decline in the number" of building sales in Manhattan below East 96th Street and West 110th Street.
However, Kyle Mast, a managing director of the company, added that the company believes "this figure to be deceptive as we anticipate activity accelerating as the year progresses to compensate for fourth quarter 2008's extraordinarily abysmal number of contract executions."
The report indicated that the multi-family sector has been holding up the best:
"Of the 13 apartment buildings that traded in the first quarter, 3 were elevator buildings. More than half of the sales were under $5 million, and all but 2 were under $10 million. One- to four-family buildings showed some surprising numbers, with 7 out of the 9 sales that took place in the first quarter of 2009 occurring at above $1,000 PSF with the high PPSF being $3,220. It would appear retail and mixed-use properties have experienced downward pressure due to the increased retail vacancy rate city-wide and many investors now expecting in place returns at or above 6%. As a result, cap rates in this sector are up by about 150-200 basis points. The development market saw only 3 sales in the first quarter of 2009, 2 of which were sold to end users. For the most part, the market for development sites remains at a standstill."
The report for the first quarter of this year "illustrates the dramatic slowdown in sales activity" and "reflects the market mentality created in September 2008 with the collapse of Lehman Brothers, the federal bailouts of AIG, Fannie Mae and Freddie Mac, and the ensuing paralysis of the credit markets throughout the fall." "The world changed on September 15, 2008 and any information prior to that date is irrelevant when calculating today's values," added Mast.
However, Kyle Mast, a managing director of the company, added that the company believes "this figure to be deceptive as we anticipate activity accelerating as the year progresses to compensate for fourth quarter 2008's extraordinarily abysmal number of contract executions."
The report indicated that the multi-family sector has been holding up the best:
"Of the 13 apartment buildings that traded in the first quarter, 3 were elevator buildings. More than half of the sales were under $5 million, and all but 2 were under $10 million. One- to four-family buildings showed some surprising numbers, with 7 out of the 9 sales that took place in the first quarter of 2009 occurring at above $1,000 PSF with the high PPSF being $3,220. It would appear retail and mixed-use properties have experienced downward pressure due to the increased retail vacancy rate city-wide and many investors now expecting in place returns at or above 6%. As a result, cap rates in this sector are up by about 150-200 basis points. The development market saw only 3 sales in the first quarter of 2009, 2 of which were sold to end users. For the most part, the market for development sites remains at a standstill."
The report for the first quarter of this year "illustrates the dramatic slowdown in sales activity" and "reflects the market mentality created in September 2008 with the collapse of Lehman Brothers, the federal bailouts of AIG, Fannie Mae and Freddie Mac, and the ensuing paralysis of the credit markets throughout the fall." "The world changed on September 15, 2008 and any information prior to that date is irrelevant when calculating today's values," added Mast.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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