NEW YORK CITY—When the final ledger entries are made on 2014, the investment sales market citywide is likely to go into the record books. The 5,100 properties expected to be sold across Manhattan and the three largest of the outer boroughs will surpass 2007's previous all-time high, says Massey Knakal Realty Services.

Citywide, dollar volume is on pace to exceed $52 billion and is expected to top $60 billion by year's end, according to the firm's third-quarter report. Although Manhattan south of 96th Street is leading the way for value appreciation, with a 24% year-over-year increase to $1,303 per square foot, it's in the outer markets where 83% of all year-to-date activity has taken place.

This is due in large measure to what Massey Knakal terms the “Manhattanization” of the outer markets. Formerly, the boroughs saw few if any institutional takers, but now increased investor interest and confidence is blurring the lines in these buyers' consciousness between Manhattan and certain submarkets within the outer markets. Furthermore, as panelists at last week's RealShare New York conference made clear, that list of submarkets is growing all the time, as formerly bargain-priced neighborhoods have become gentrified.

Even so, said Eastern Consolidated's David Schechtman, the pricing still makes sense. “You have to understand the amount of equity that's in this city today, and people's return expectations,” Schechtman, principal and executive managing director with Eastern, tiold the RealShare audience. By way of comparison, another investment sales expert, Janice Stantion, senior managing director of capital markets at Cushman & Wakefield, observed that there's currently 15% more liquidity here than there was at the '07 peak.

Schechtman asked rhetorically whether New York City cap rates have gotten too low, and whether $1,000 per square foot—or, in the case of Manhattan, $1,300 per square foot—was a “stupid” price to pay. “Think of it this way,” he said. “We are still eighth or ninth on the list of the most expensive places to live. You're paying 35% of your gross income to put the key in the door and buy or rent an apartment here. In Tokyo or Shanghai, you're paying 60% to 70%.”

It's not a foolish number, he added, because “people are gobbling it up. And part of the reason is that there's abundant debt financing.” New York remains “a stellar place to invest,” although he expressed concern that the de Blasio administration “would decimate the free trade of commerce” over the next two years.

When moderator Jeffrey Lenobel, partner with Schulte Roth & Zabel LLP, asked Marcus & Millichap's J.D. Parker whether the city remains a great place for investment, Parker's response was terse and unequivocal: “Absolutely.” First VP and district manager for MMI, Parker noted the firm's New York office gets calls daily “from across the nation and across the globe.” Globally, Parker said, New York is the number two commercial real estate market behind London, and “I don't see that slowing down anytime soon,” although he noted that there is a lack of supply.