Hurdles to Rebound Remain for Manhattan Commercial Real Estate Sales

By Keiko Morris Features Dow Jones Newswires

Investment in Manhattan commercial real estate increased between the first two quarters of this year but dropped dramatically from last year as forces threatening a rebound in the market remain, according to a report and data from real-estate services firm Avison Young.

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Sales in the second quarter rose to about $5.6 billion, a 74% increase from about $3.2 billion tracked in the first quarter of this year. The report, however, largely attributed the bump to the $2.21 billion purchase of 245 Park Ave. by Chinese conglomerate HNA Group.

Compared with the same period in 2016, second-quarter sales dropped 60% from $13.8 billion in deals, according to Avison's data. The firm tracks sales transactions with a price of $10 million or greater.

The average number of quarterly deals also has dropped significantly, the report said. The Manhattan market for commercial real-estate sales had averaged 141 deals per quarter between the third quarter of 2013 through the second quarter of 2016. That count has dropped to 71 for the four quarters ending in the second quarter of 2017. In the second quarter, 66 deals were recorded, according to the report.

Though the report said the "slumping market is far from dead," among the immediate headwinds that could damp activity are rising interest rates, maturing prerecession securitized commercial real estate debt and the Chinese government's increased scrutiny of big-ticket investment abroad. Since the beginning of 2013, Chinese companies have invested nearly $18 billion on Manhattan real estate, the report said.

Write to Keiko Morris at Keiko.Morris@wsj.com

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(END) Dow Jones Newswires

July 16, 2017 15:23 ET (19:23 GMT)