Commercial firms reported a strong increase in investment sales volume for the city overall in 2010. That activity, coupled with a higher average price-per-square foot for trophy office towers, has given a general impression that prices have risen overall in the city. For example Cushman & Wakefield in January showed a 73 percent increase in pricing from 2009 to 2010 for Manhattan’s prime office towers, even as it noted the sharp rise was based on a limited number of transactions.
But investment sales brokers Robert Knakal, Marco Lala and Shimon Shkury, tell Insights from The Real Deal (see video above) that not all of New York City is seeing strong increases in pricing, and in some areas of the outer boroughs, values are still falling.
Knakal, chairman of Massey Knakal Realty Services, says, “The trends in value continue to slide, however, in Queens and Brooklyn.” Knakal says that even in Manhattan values were weak, citing a Kips Bay owner who was converting a retail space to residential because commercial leasing was too slow.
Lala, an associate vice president of investments at Marcus & Millichap who specializes in Northern Manhattan and the Bronx, tells Insights from The Real Deal that, “There are some areas where I still think there is a lot of pain ahead.” He mentions Melrose, Soundview and the Highbridge areas of the Bronx as examples.
Parts of Northern Manhattan remain flat, says Shkury, president of Ariel Property Advisors. “I believe areas of East Harlem still have a ways to go up,” he says.