NEW YORK CITY-It’s really not a surprise at all. Coastal city. High barrier to entry. And, oh yes, the fact that Manhattan is one of its boroughs. All the things an investor could want. Respondents to Integra Realty Resources‘ annual survey ranked New York as the market with the most value potential in CRE for 2013. That was just one of the revelations that came out of the Manhattan-based consultant’s annual Viewpoints briefing.
As chairman and CEO Ray Cirz indicated to the packed room at the Harvard Club, “New York is in an expansion mode.” But as we’ve heard in market forecasts this week from the likes of Prudential, Avison Young and Cushman & Wakefield, expansion in 2013, no matter the market, will be slow and at least somewhat steady.
As for Integra, Philadelphia-based managing director Joe Pasquarella praised New York’s moderate construction and rental growth as local signs of that trend. In the Viewpoints report, Cirz wrote: “Foreign investors are maintaining confidence in the New York City commercial real estate market. Many foreign investors have traditionally seen New York City as a stable market in which to invest, and that sentiment remains today, despite an uncertain global economy. Canadian Pension Plan and several other Canadian firms have been active in buying.”
“Earlier this year,” he continued, “the Canadian Pension Plan acquired joint ownership in a Midtown Manhattan office building, the fifth such building in its portfolio. We expect to see similar transactions from other foreign investors in the coming months, especially with turmoil in Europe and other parts of the world.”
But New York is not the only promising locale in the increasingly promising environment, and Pasquarella also cited Texas and California as well as the Big Apple as coming back “with a vengeance,” although that phrase might be a bit strong for such a moderate expectation. But Philadelphia, he noted, won the “award for lowest CBD office vacancy rate, at 9%. In fact, Manhattan logged a slightly higher 9.2%.
Not surprisingly, the suburbs fared with a bit less shine. In the local metro area, Long Island posted a 14.4% vacancy (compared to 2011′s 12.5%) and Northern New Jersey hitting 20.1 (a slight improvement over last year’s 21.5%).
Other highlights from Wednesday’s briefing:
• Expect e-commerce to bite deeper into brick-and-mortar retail;
• L.A. ended 2012 with the lowest industrial vacancy: 5/1%;
• San Fran logged the lowest industrial cap rates: 6%.