NYC Buyers Now Getting Pricing Last Seen 20 to 25 Years Ago
Opportunity Knocks for Savvy Investors
Calling anyone with cash: There’s never going to be a better time to buy a piece of NYC. “Values have come down a lot and stabilized in 2024 — and now present an opportunity,” said Ariel Property Advisors’ Shimon Shkury of the market for both office and multi-family buildings.
Steep Valuation Reset
In fact, buyers are now getting pricing last seen 20 to 25 years ago. Office condos that were selling for $800 to $1,000 per foot in 2019 are now closer to $400 a foot. “Owners are negotiating because they want to stay alive,” said attorney Jay Neveloff, who heads real estate at Kramer Levin.
A Price to Beat
These values are positively retro: Savanna paid just $255 million for the 185,000-square-foot office building at 799 Broadway. It cost $300 million to develop and is 71% occupied. For instance, Michael Cohen’s Williams Equities paid $147.5 million for 470 Park Ave. South or $490 per foot; it sold in 2018 for $245 million. Savanna paid $255 million, or $1,380 per foot, to Columbia Property Trust and Cannon Hill Capital Partners in the lender-advised sale of 799 Broadway. That 2022-built, 185,000-square-foot office building cost $300 million to develop and is 71% occupied at high rents.
Even Better Deals
Zar Property New York bought two smaller deals for even less: 119 W. 57th St. on Billionaires’ Row for $27 million, or $170 per foot, and 30 W. 61st St. for $15.2 million, or $97 per foot.
Market Insights
“The people buying for sub-$300 per foot or sub-$200 per foot are taking a chance,” said Craig Waggner of Cushman & Wakefield. “The city is perceived as a safe haven and it’s hard to go wrong.”
International Investors Eye Distressed Opportunities
High-net-worth individuals, family offices, and international groups are kicking bricks and buoying the market. “The international community will be more focused on higher quality and we are seeing some Asian investors that want to chase distressed opportunities,” said Doug Middleton of CBRE.
Conclusion
The market is bouncing off the bottom and has created a foundation for the recovery. There will be new opportunities at significantly reduced prices.
FAQs
Q: What is driving the steep valuation reset in NYC real estate?
A: High interest rates, ground rent resets, and regulations are contributing to the steep valuation reset.
Q: Who are the key players in this market?
A: High-net-worth individuals, family offices, and international groups are active in the market, along with real estate investment firms like Savanna and Zar Property New York.
Q: What is the outlook for the market?
A: The market is expected to continue its upward trajectory, with new opportunities emerging at reduced prices.
