The interesting thing about the New York office market is that sales have been declining for three straight quarters even as the stock market was making new highs. Generally the office market moves with the stock market. From Wolf Richter at wolfstreet.com:
Where the heck is the Foreign Money when you need it?
The market for office buildings in one of the hottest and most overheated real-estate markets in the world, New York City, just went into the deep-freeze. If you see the word “plunge” a lot below, it’s because that’s what happened in the first quarter of 2017.
It was exactly what no one in the industry needed. Sales of large office properties (those with over 50,000 square feet) that closed in Q1 2017 plunged 63% year-over-year, from $5.54 billion in Q1 2016 to $2.1 billion. It was the lowest transaction amount in any quarter since Q1 2013.
According to Commercial Café, which analyzed data from Yardi Matrix and PropertyShark, that $2.1 billion in Q1 office sales, in total 10 deals, was down an ear-ringing 80% from the $10.3 billion, and 26 deals in Q1 2015.
This chart shows the plunge in billion dollars:
In terms of square footage sold, a similarly ugly picture emerges. Sales plunged 39% year-over-year to 2.8 million square feet, the lowest in the data series going back to 2013, and down 74% from the glory days of Q1 2015:
The average price per square foot of these sales plunged 23% year-over-year, to $741 per square foot, and 36% from the peak, which occurred in Q2 2015. It was the lowest average since Q1 2014. It was an ugly quarter.
To continue reading: New York’s Office Market Gets Crushed, Bubble Deflates