C
ommercial real estate sales in Manhattan are being weighed down by tariffs, interest rates, and multi-family foreclosures. However, strong office and retail leasing are driving up values for select properties, creating a unique market for unique assets.
In the first quarter of this year, Avison Young counted 84 sales transactions in Manhattan south of 96th Street valued at $5 million or more, totaling $2.7 billion. This included 28 residential sales worth $440 million.
Investors are taking advantage of rent spikes around Grand Central Terminal to buy into the area's boom. For example, JLL sold a majority stake in 320 Park Avenue for $506 million in December, with Munich Re buying the remaining 75% stake for $506.25 million, revaluing the tower at $675 million.
Savills is helping Cooper Union cut a new lease with a new operator for the Chrysler Building, while Eastdil is marketing 590 Madison Avenue, which has seen leases by LVMH and Apollo Global Management boost its value. The trophy tower is expected to sell for $1.1 billion.
Retailer Ralph Lauren paid $132 million for its store space at 109 Prince Street, a move to avoid losing retail space in Soho to a competitor. There's also interest in lower-occupancy office buildings being eyed for residential conversion, such as David Werner's purchase of 5 Hanover Square in the Financial District.
Office-to-residential conversions are having a buoying effect on office leasing by removing square feet from vacancy stats and forcing tenants to fill other buildings. For example, Werner bought 300 E. 42nd Street out of foreclosure for $52 million and will convert it into 132 rental apartments.
Foreign groups are starting to sniff around the market, attracted by the relative safety of US real estate. Existing residential towers are also trading, such as Stefan Soloviev's Rivers Bend at 501 E. 87th Street, which sold to A&E Real Estate for $116.5 million in March.
Large luxury rental apartment buildings like 800 Fifth Avenue and 560 W. 43rd Street are also being sold, with the latter going for roughly $250 million through JLL. However, building hunters who can't find unicorns have another target: foreclosures, which are plentiful.
