Commercial property in Manhattan could see a revival this year after activity staggered to a halt in 2009, offering hope that the struggling sector might not be as severe a threat to the economy as feared. According to a report by CB Richard Ellis, the real estate services company, investment in Manhattan’s office sector is poised for a rebound, with prices and vacancy rates stabilizing as the US economy recovers.
Manhattan’s office sector recovery comes as the US commercial real estate market is showing signs of life. Earlier, Moody’s/REAL commercial property price index showed prices rising by 1 per cent in January. That was the third consecutive month that prices rose and they have climbed by 6.3 per cent since reaching a bottom last October.
Last year office sales volume plunged to the lowest level since the early 1990s, with only eight properties worth more than $30m changing hands, while prices per square foot fell by 59 per cent from 2008. CBRE noted that the rate of price declines has slowed significantly and predicted that office rents in New York will rise by 2.2 per cent in 2010.
Meanwhile, vacancy rates, which doubled from 2008 to nearly 10 per cent in 2010, are expected to fall back as the labour market improves. It has been predicted that the threat of a wave of distressed assets creating a complete collapse in the market might have been overstated, as lenders have shown an increasing willingness to offer loan extensions and workouts.
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