What happened last quarter? Did everyone start their holiday in mid November? The volume of commercial property sales fell by more than 40% in the fourth quarter to $6.1 billion from $10.7 billion in the third quarter.
Nearly every property type outside of hospitality saw a decline, but the slowdown was most pronounced in multifamily and office property sales, both of which registered half the volume that was traded in the third quarter.
The lackluster fourth quarter results were indeed a casualty of the broader uncertainty from the European debt crisis that had escalated at the end of last summer. Combined with other tepid economic conditions in the U.S. economy, the lack of resolution in Europe put off investors for the short term.
The decline was primarily due to a lack of large transactions, the statistics clearly show that the small and mid-size deals are still trading. Moreover, little seems to suggest that this segment of the market will suffer in the near-term. Statistics on the U.S. economy are starting to improve (see future blogs), and New York City’s real estate market is still considered one of the safest investments in the world. Those who fear Europe may in fact shift their focus away from the continent and towards the U.S.
As per President, Daun Paris, “Our investors are still eager to buy in the current market despite the bad news from Europe –and maybe because of the conditions in Europe they are even more interested in buying in New York City. Still, we’re just not seeing as many large transactions as we had six months ago.”