United States commercial real estate prices slightly fell during the months of January and February. According to data from Real Capital Analytics, this was driven by weakness in the Manhattan market.
The real estate market was thought to be slowing down and the findings provide evidence as well as a warning sign that it is not merely a hypothesis anymore. Bloomberg got a statement from the senior vice president of the RCA, Jim Costello. The senior vice president said, "Anything that happens in Manhattan reverberates."
The overall prices of the U.S. commercial real estate fell slightly, about less than one percent each between January and February of this year. However, it was a different story in major city centers. Prices of office buildings in those areas have dipped by 5.2 percent since December, according to a feature from The Real Deal.
U.S. commercial real estate company Cushman & Wakefield expected the sales volume of investments in Manhattan and the surrounding districts to fall by up to 30 percent this year following $75.5 billion in sales during the year 2015, according to a feature from The Wall Street Journal.
One element that experts were blaming was the weakness in the Commercial Mortgage-Backed Securities market. They claimed that it had made financial acquisitions more difficult. Costello also reportedly said,"That type of debt is important for very large transactions."
He also described Manhattan as an expensive place where every deal made was worth hundreds of millions of dollars.
Observers, however, argued that it was still too early for concern despite the alarming dips in sales. After all, the first quarter of the year had just ended. Doug Harmon, a broker in Eastdil Secured, a real estate investment banking company, said that in certain circumstances, pricing can be slightly off peak. However, he stated that those prices are still sensational. Right now, the U.S. commercial real estate was not in good condition and sales may fall still.
