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Knakal: Get Ready for the Investment Sales Surge July 26, 2010

Posted by Erik Swanson in Articles, Research/Data.
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Robert Knakal writes in Streetwise that three factors will drive investment activity: 1) special servicers and lenders will attempt to clean up their balance sheets  before the start of 2011 and increase distressed sales in an attempt to take advantage of market demand; 2) a record low interest environment is keeping cap rates low and thereby buoying values and; 3) owners considering selling in the near future faced with capital gains taxes will try and beat the increase in 2011. 

In the first half of 2010, we have seen a significant increase in the number of investment property sales in New York City. I understand, from speaking with many of you across the country, that this trend is being seen elsewhere and, while perhaps it is not as sharp and increase as in New York, the trends are positive nonetheless.

In all of 2009, 1436 properties were sold in the Big Apple and, in the first half of 2010 (1H10), there were 818 buildings sold. The dollar volume of sales also increased significantly, going from $6.26 billion in all of 2009 to $6.49 billion in 1H10.

The projected annualized increase in the number of buildings sold is 14% while the annualized dollar volume increase is projected to be 131%. These figures illustrate two very tangible dynamics. The first, and most obvious, is that activity is picking up significantly and, the second is that the average sale price of transactions is increasing sharply.  The average sales price of a New York City transaction in 1H10 reached $7.9 million, up from $4.4 million last year.

Click here for his full post.

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