Over the last few months, a shift has reverberated across the sales market. There is stress on development sites, stress on retail condos and stress on hotels.
“It’s not a bloodbath, but people are bleeding,” says one broker requesting anonymity. “You can’t get a construction loan, you can’t get a partner, and you can’t get an anchor tenant on the commercial side. The outer boroughs spiked really hard and are coming back to reality. There is a long way to fall.”
Last year, sellers were trying to achieve buoyant 2015 pricing, explains Woody Heller, head of capital markets at Savills Studley. “That time has passed. There is still no shortage of capital, just a difference in pricing expectation.”
But it’s not all bad news. There is still a gap between the supply of trophy product and global demand, says Douglas Harmon, chairman of capital markets at Cushman & Wakefield, who is currently marketing 237 Park Ave. “The shrinking inventory of trophy product is mismatched against a queue of global institutional investors who still view New York real estate as the best risk-adjusted, safe-haven investment option,” he says.
Andrew Scandalios, senior managing director of HFF, recently oversaw the sale of marquee property 60 Wall St., which needed a $1 billion mortgage. “There is more capital now — it’s just recognizing that the fundamentals are soft, rents are flat and [net-effective rents are going down],” Scandalios says. “But it’s worse in hotel and retail and multi-family, which are just behind office.”
Right now, Darcy Stacom, chairman of capital markets at CBRE, says the market needs a stronger critical mass of noteworthy transactions to give people “greater comfort” on pricing.
Stacom is completing the $2.21 billion sale of 245 Park Ave. to a Chinese insurance company, HNA Group. It achieved a trophy-size tab of $1,200 per foot. She also believes one key to spurring sales is for sellers to…