Avison Young Executives Present In-depth Briefing on Trends and Outlook for NYC Commercial Real Estate Market
BOMA New York’s “2023 State of the Market” event delivered an up-to-the minute and highly optimistic message for the future of the city’s commercial real estate market. Scott Singer, Principal, Co-Lead of Tri-State Debt & Equity Finance; and James Nelson, Principal, Head of Tri State Investment Sales from Avison Young presented evidence that workers are returning to offices in droves despite higher interest rates. The panel was moderated by Glenn Waldorf from Bell Environmental who asked questions related to work from home phenomenon as well as federal government’s campaign against inflation with higher interest rates.
Singer noted that New York is distinct due to its diversity in industries which attracts people across all ages while Nelson reinforced this observation citing a deep talent pool now with many people coming back after leaving earlier. He also added that there will be an influx record 61 million tourists this year too! Both experts observed a positive change in owner/tenant dynamic driven by owners’ desire to make their buildings more attractive towards tenants leading Class A & trophy buildings performing better than others according to Nelson . Hyundai bought 15 Laight St., Tribeca recently for $275 million cash because it was exactly what they wanted – highlighting end users actively buying properties based on specific needs rather than institutional buyers being on sidelines at present times .
Singers cited fluctuations in commercial mortgage interest rate over past decades ranging between 2.64% (lowest) till 7% (highest). But he said memories are short so 5 % quote sounds low today! Though dollar volume financings declined 59%, deals are still getting done such as Hyundai purchase mentioned above or Rose Associates recent financing transaction where they closed an attractive deal receiving fewer proposals but seriously interested ones compared last year . Leasing activity is dominated by class A properties accounting 71 % out total 500 million square feet office inventory with 24 % sublease space available presently while retail sector recovering too ! It’s not just submarkets but actual building specific conditions making difference according tot both experts , Senior financing currently at 55 – 65 LTV range though it had been 75 – 85 during career time frame reported Singer when asked about regional banking failures misreported lately saying much media attention has been given small regional banks holding most mortgages whereas business happens through all sizes lenders plus other types too changing originators over time depending upon individual deal motivation ! To conclude both were bullish about CRE market citing historical perspective how urban centers have attracted people since thousands years ago !
