Commercial Real Estate Brokers Take Advantage of Low Prices
Commercial real estate brokers are stepping up their efforts to negotiate sales as they take advantage of dropping apartment prices in Manhattan.
According to reports released by Prudential Douglas Elliman and Miller Samuel Inc., the median sales price for previously owned apartments in Manhattan have dropped to $750,000 in the third quarter, a decrease of 8 percent from the median price in the same quarter last year.
The third quarter drop rate however is lower than the 26-percent drop in the second quarter compared to $725,000, which was the median sale price in the second quarter last year. Compared to the second quarter this year, the median sale price in the third quarter increased by 3.4 percent.
The median price for a new apartment in a newly-constructed apartment building is $1.2 million, a price basically unchanged. But this price level, according to commercial brokers, does not reflect the true state of the residential market because few are buying at that price level. They said that it can take a couple of years to close transactions above $1 million.
As apartment prices fall down, the number of sales transactions closed by commercial real estate brokers goes up. In the third quarter, sales transactions rose by 46 percent from the second quarter to 2,230 deals. The number of sales deal though was still lower by 16 percent compared to sales in the third quarter last year.
Pamela Liebman, chief executive of The Corcoran Group, said buyers now are choosing from a lot of great deals and they are seeing a lot of value from the multifamily properties available for sale.
In addition, sellers are now more willing to reduce their prices, according to brokers at Brown Harris Stevens. Apartment sellers now are accepting 95 percent of their asking prices, a decrease from the 97 percent they were willing to accept in the past.
Brokers and real estate analysts however admit that more prospective buyers are taking their time in making their purchase decisions because of the high inventory of lower-priced apartments for sale.
Prospective buyers also know that the lower prices will stay unchanged for a while because of the still high level of unemployment and the difficulty of obtaining large mortgage loans.
According to commercial real estate brokers, high-end apartments remain the most difficult to sell. They said that no broker has sold a co-op apartment priced above $30 million in the third quarter.
