16 REAL ESTATE FORUM SEPTEMBER 2016 Part of the ForumLOCAL Series
Perhaps heeding the definition of insanity—doing the same thing over and over and expecting different results—New York City’s commercial real estate investors and developers are making big changes.
For a host of reasons, including yield hunting, demographic shifts or a strategic
hedge against a potential future downturn, buyers and builders are shifting into asset
classes that heretofore weren’t of interest, reducing the size of their deals or even
changing what parts of the city, or region, they;re considering. “People are stepping
out their comfort zones,” states Michael Weiser, president, of GFI Realty Services.
“Whether they’re targeting a different asset class or location, it’s widely prevalent.”
Stephen Shapiro a VP with JLL, is seeing the same. “Previously, the bulk of
investment activity was office but over the past 18 months there’s been a scarcity of
office buildings to buy partly because of investors who have longer-term horizons.
“In 2006, class A buildings traded like they were chess pieces; people bought
and sold a year or two later,” he notes. “Today, investors are buying at lower returns
because their hold term is long so they’re less sensitive to lower cap rates.”
And while it appeared to purchasers that office yields were slipping, the price
per square foot for multifamily buildings was on the rise and more money was com-
By Rayna Katz
Market changes are
leading buyers and
developers to shift
asset classes, change
the size of their deals
or even move into
new areas of the city
The RKO Theater site in Flushing, Queens was recently sold at an acquisition price that
likely would not exist in Manhattan.
Stepping Out of the Comfort Zone
Real Estate New York