Significant Drop in International Investment Contributed to Decline in Manhattan Commercial Real Estate in 2017
NEW YORK, NY – February 9, 2018 – International investors retreated from the New York City commercial real estate market in 2017, which contributed to the 41 percent year-over-year decline to $23 billion in Manhattan’s investment property sales, according to Eastern Consolidated’s research report View from the Street.
“The slowdown is a reflection of a turning market, and when a market turns there tends to be a lull in sales activity as buyers and sellers adjust their expectations,” said Peter Hauspurg, Chairman and Chief Executive Officer.
The market saw a significant retrenchment by international investors, as countries that recorded over $1 billion in sales in 2016 pulled back in 2017. Chinese buyers invested $2.5 billion in Manhattan commercial real estate in 2017, a 62 percent decline from the previous year; German buyers invested $838.5 million, a 64 percent decline; UK buyers invested $188 million, an 87 percent decline; Canadian buyers invested $1 billion, a 19 percent decline; and buyers from Hong Kong invested $547 million, a 55 percent decline. In addition, Israeli investment fell 74 percent year-over-year to $180 million.
International buyers still accounted for more than a third of the sales in Manhattan in 2017, although that was a decline from a 42 percent market share in 2016. REITs increased their market share to 15 percent, up from 3 percent last year, while institutional buyers accounted for 19 percent of the sales, a 28 percent decline from 2016.
According to the report, the West Village and Chelsea attracted more investment dollars in 2017 than 2016, with the West Village showing a 146 percent increase in dollar volume to $1.16 billion, and Chelsea showing an 8 percent increase in dollar volume to $2.1 billion. The remaining neighborhoods posted year-over-year declines.
View from the Street, Neighborhood Overview: Manhattan provides an overview of the market and a summary of investment sales, asking retail, office, and multifamily rents, and condo sales in every neighborhood in Manhattan. The report is available by clicking here.
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