The average price paid per building square foot for development sites in Manhattan last year "soared back to its highs of 2007-2008 as did the average transaction size," according to a new report released today by Eastern Consolidated.

The study noted that "the prices paid for development sites in Manhattan accelerated from the start of the last decade through 2007," but "then plummeted in 2009 as did the volume of transactions."

The company analyzed more than 1,050 transactions over an eleven-year period and the results indicated that the price for the right to build escalated over the last decade from a low of $75 per buildable square foot in 2002 to a high of $321 per buildable square foot in the first quarter of 2008.

As shown in the chart at the right the average price for the right to build sank rapidly from that high to below $200 per buildable square foot at the end of 2009 but then jumped to an average of $330 per square foot in 2010 leading Peter Hauspurg, chairman of Eastern Consolidated, to observe that "none of us here would have ever predicted in the dark days of 2009 that we would sell as many development sites in 2010 as we did and at prices seen as recently as 2008.'

The report noted, however, that "a handful of Upper Manhattan transactions weighed heavily in the lower 2009 average while a handful of larger transactions in the Plaza district weighed heavily in the higher 2010 average."

The report concluded that the development site market has "corrected" back to its peak. "The sales volume is not likely to return to its 2006 high of $3.6 billion per year in the near future, but with the number of deals that closed in early 2011, the market is expected to continue to improve this year and next."