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After Manhattan’s Office Boom, a Hard Fall

TERRY PRISTIN The NewYork Times
After Manhattan’s Office Boom, a Hard Fall - Manhattan - USA - New York - Price Drop - Commercial Property - Real Estate


Just as office towers appreciated in value faster in Manhattan than elsewhere during the boom years, now their decline is outpacing the rest of the nation, brokers and analysts say.



Building values are dropping as unemployment worsens, offices empty, rents decline, credit remains tight and buyers expect higher rewards for taking on more risk.

“The outlook for New York is much worse than what we see outside New York,” said Sam Chandan, the president of Real Estate Economics, a research company in New York. Some people estimate that values in some cases have fallen as much as 50 percent.

At the peak of the market in 2007, prime Midtown towers traded for nearly $800 a square foot, on average. Many buildings sold for $1,000 a square foot or more. One office tower, 450 Park Avenue, at 57th Street, changed hands for nearly $1,600 a foot. These extravagant prices were based on the widely held belief that as leases expired, many spaces would fill up at rents well above $100 a square foot.

So what are Manhattan office buildings worth today? Since no substantial transactions have taken place in recent months, no one knows for sure. But some real estate specialists are willing to hazard estimates.

Robert Von Ancken, the senior appraiser for Grubb & Ellis in New York, estimated that prime Midtown buildings were now worth $425 a square foot, on average, while lesser buildings had a value of $350 a square foot, down from $500 to $600 a square foot two years ago. Mr. Von Ancken said he could not estimate how far values in Lower Manhattan had declined until more was known about the prospects for the financial services companies that occupy so much downtown space.

 


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