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New York Commercial Real Estate 6 1/4 cents on the dollar from peak

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June 10, 2009 – Comments (9)

CR has a post about someone buying some commercial real estate in New York for $100 /sq ft.

Not having any idea what the New York commercial real estate market has been like, I did a search and found this article, where commercial real estate sold for $1600 /sq ft. The article does say that was a record price.

So, looks like tax payers got screwed again as the building sold was the AIG building.  Amazing they can't sell for a reasonable price and return some of tax payer's money to them.  

 

 

9 Comments – Post Your Own

#1) On June 10, 2009 at 5:18 PM, blake303 (29.30) wrote:

I don't think a record setting price provides an 'apples to apples' comparison. I read this article earlier, which suggests the building would have fetched $300 million a few years ago. That seems more reasonable than $0.06 on the dollar. 

http://www.luxist.com/2009/03/18/aig-hopes-to-sell-nyc-building/

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#2) On June 10, 2009 at 5:35 PM, alstry (36.01) wrote:

DWOT,

It is funny, a few years ago I developed the concept of Concentric Contraction....what few realize is that our entire economy is not much more than a Ponzi Scheme of essentially people borrowing money to drive profits and profits drive government spending and government spending drives the economy.

Between borrowing and government spending, we are looking at about 90% of the economy.......soon many will realize we are all welfare recipients of one sort or another.

This building sold less per squaure foot then what it used to cost to rent.  As I said in an earlier blog....pretty soon homes will be worth practically nothing.

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#3) On June 10, 2009 at 5:52 PM, blake303 (29.30) wrote:

alstry (99.68) wrote: This building sold less per squaure foot then what it used to cost to rent. 

What is your source? From DWOT's second article written near the CRE peak: "The average gross rent for Class A building in the most expensive business area has reached nearly $75 a square foot."

A better article here suggesting that prices are down 24% from the 2007 peak. That seems low to me, but the highest and best use mentioned (residential) is an interesting point. 

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#4) On June 10, 2009 at 7:02 PM, alstry (36.01) wrote:

Blake,

You have obviously never rented office space in Manhatten....rent approached $200 per foot at the peak for quality space.

Right now you can sublet space over 70% off approaching CAM costs.  It sucks of you are a landlord.

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#5) On June 10, 2009 at 7:05 PM, dwot (37.26) wrote:

blake303, right away when comparing a small property to a large property there will usually be a higher price per square foot.

But basically we have a 16-fold difference in the price per square foot between two different properties, one sold at an ultimate high and the other hopefully at low.

I don't know New York, but a 16-fold difference in price really makes me question how there can be such a huge price difference.  Does the AIG building need enormous maintenance or something?

 

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#6) On June 10, 2009 at 11:33 PM, starbucks4ever (97.97) wrote:

Even $100 per square foot is outrageosly expensive. If it were up to me, I would just remove AIG top brass from NY and resettle them in Oklahoma, where some old farmer's barn would provide them with all the office space they need. In the 21 century HQ location doesn't matter, you can teleconference from anywhere. 

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#7) On June 11, 2009 at 12:54 AM, blake303 (29.30) wrote:

 alstry (99.68) wrote: You have obviously never rented office space in Manhatten....rent approached $200 per foot at the peak for quality space.

Brilliant deduction. Are you drinking Manhattans?  I asked for your source. As hard as it is to believe, I can research office rent without actually renting property. I posted several articles supporting my assertion, but they were lost when I received the standard MF error and don't feel like looking them up again. The AVERAGE office rent was below $100/mo even at the peak. Some rents exceed the average by definition

 dwot (99.98) wrote: I don't know New York, but a 16-fold difference in price really makes me question how there can be such a huge price difference.   

There isn't a 16-fold difference. The articles I added are comparing the same building in different economic environments. The AIG building price differential was 3-fold from peak to gov't fire sale. I am not familiar enough with both buildings to say why the price discrepancy is so large, but there are a litany of factors that could contribute to it. Have you compared neighborhood, seller motivation, views, distance to subways, amenities, number of bidders, size, age, etc?  I am not trying to detract from you point, far from it. Yet, a 16-fold reduction in value is a huge overexaggeration.

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#8) On June 11, 2009 at 8:49 AM, dwot (37.26) wrote:

My point was that at the peak commercial real estate sold for $1600/sq ft at its peak and this building sold for less then $100/sq ft.  That is a 16-fold difference in commercial real estate pricing in the same city.

 

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#9) On June 12, 2009 at 2:12 AM, blake303 (29.30) wrote:

New York is a big city. You are comparing a ferrari to a mustang.

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