The surging commercial office market has finally caught up to the water cooler crowd.
“Everyone including the taxi driver knows what’s going on in commercial real estate,” observed Robert Emden, a principal of PBS Real Estate. “It’s very much on everyone’s front burner as it’s becoming the wild, wild Middle East of Manhattan.”
With strong demand, single digit vacancy rates and a lack of new office product, both rents and sales numbers are rising.
“The market is performing well in terms of the fundamentals, and the capital markets’ execution of debt and equity is strong,” said Steven Kohn, President of Sonnenblick Goldman, who structures joint ventures and works on financing, debt, equity and everything in between. “It’s a very liquid market and we have new sources of capital that seem to appear daily.”
Rates are still extremely favorable for borrowers, said Richard Bassuk of The Singer & Bassuk Organization, another major mortgage brokerage. He said a variety of lenders compete for good locations and businesses, thus driving loan pricing down. “Portfolio lenders, securitized lenders and banks are looking for good, income producing properties,” said Bassuk. “It’s as much a borrowers’ market as it’s has ever been.”
But to be a borrower, you have to first win the new deals.
Keith Rubenstein, a partner with Somerset Partners who is selling 85 Ninth Avenue to Related Companies for $430 million, quipped, “As a seller it’s great; as a buyer it’s tough.”