Without a doubt, the NYC property sales market has rebounded. Our office
tracked $25.6B in trades last year, which was an 80% increase from 2010
and approaching the 7 year average of $30B. There are several reasons
for this recovery ranging from low interest rates to increased foreign
demand. However, the one that stands out in my mind is that NYC was not
overbuilt in this last cycle.
While major cities around the world added tens of millions of square
feet in 2008-2009, Manhattan added just one speculative office building:
11 Times Square. Due to its timing, the building still sits partially
vacant. As unfortunate as this is, can you imagine if there were ten
more buildings constructed at the same time?
If NYC did overbuild, the vacancy rate would certainly be much higher
than the 11.7% that CBRE reports in Midtown. There also wouldn’t be
nine signed at over $100/SF this year already.
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