The private equity and other pooled funds have been cashing out the hottest properties in Manhattan at double the rate of a few years ago. According to Reuters, the institutional investors and real estate investment trusts that are taking private equity's place indicate a comfort level for older buildings that have been renovated in Midtown South, the district accounting for many of the transactions. But other investors who bought these buildings lessened fears that the market is peaking.
Furthermore these buildings are now considered Class A unlike decades ago. The entrance of companies like Apple Inc , Facebook Inc and Google Inc over the past ten years has made Midtown South the heart for information technology, advertising and media companies.
"Manhattan has been pretty picked over," said James Murphy, an executive managing director of commercial real estate company Colliers International.
Demand is so strong that the office space in Midtown South was highly available about half the average in the second quarter in the U.S.
The market for the bare-brick, open-space arrangements that depict the locality took off in 2011, when Google paid $1.9 billion for a 2.9 million square-foot building in the Chelsea area there.
Since then, according to Murphy, rents in Midtown South have rose up to levels as high as $75 a square foot. That is still lower compared to what the glass and steel office buildings make in Midtown, where demand is more scattered.
Leasing and sales have been peaking over the past eighteen months. Some institutional and foreign investors are buying these renovated buildings despite being in less attractive locations in the middle of a block.
Leasing and sales have been strong over the past 18 months. Some institutional and even foreign investors are buying significantly renovated buildings despite their less attractive locations in the middle of a block.
"That's something you really have not seen before," Murphy said.
