New York City Commercial Property Sales Plunge to 2009 Lows

Mish

Commercial property sales cratered in New York City. And it won't stop there.

Painful Consequences for City Tax Collections

The Volume of Commercial Property Sales in New York City Cratered in the second quarter and the trend will likely accelerate.

Investors purchased only 170 properties valued at $3.6 billion between April 1 and the end of June, the lowest number of transactions for a three-month period since the second quarter of 2009, according to B6 Real Estate Advisors. There were 523 deals valued at $7.6 billion in the second quarter of 2019, said the firm, which specializes in New York commercial property sales.

“Here you see a cliff,” said Adrian Mercado, B6 Real Estate chief information officer. 

“The decline in value is the bigger issue for the city to face,” said Mr. Massey, who ran for mayor in 2017. “We could be talking about billions of dollars in unanticipated shortfall.”

Not Just New York

  • More people than ever are working at home.  
  • With social distancing requirements, it's hard to squeeze into elevators.
  • Department stores are in a world or hurt and the trend is unmistakable. Online shopping is killing malls. 

Not Just Commercial

That pair of Tweet pertains to residential property, not commercial. That amplifies the concern.

Unemployment is Much Worse Than it Looks

With continued claims hovering near 20 million and perhaps another 10 million collecting PUA, there between 20 million and 30 million people who are going to be in a word of hurt as soon as assistance ends. 

They will not be going to the office nor will they be buying real estate.

For discussion, please see Unemployment is Much Worse Than it Looks

Mish

Comments (26)
No. 1-14
MiTurn
MiTurn

It will be quite interesting to look back at these same metrics in about 3-4 months or so.

Tony Bennett
Tony Bennett

"Commercial property sales cratered in New York City. And it won't stop there."

...

Yep.

It is just getting started ... and it will leak into residential.

The hit to local tax revenues will be epic.

Tony Bennett
Tony Bennett

“The decline in value is the bigger issue for the city to face,” said Mr. Massey, who ran for mayor in 2017. “We could be talking about billions of dollars in unanticipated shortfall.”

...

No kidding ... and just as predictable as day following night.

Authorities allowing #cancelrent / forbearance / moratorium to run amok has its consequences. But hey, it was all about propping up April / May (and stock market) and the future be damned.

THX1138
THX1138

Don't forget riots and de-funding police.. who'd want to live or shop in a city under these conditions?!

njbr
njbr

Lots of effects ratcheting through the system--years to go of this mess.

Tony Bennett
Tony Bennett

cnbc:

Delinquencies in commercial mortgage-backed securities jumped by 213 basis points in June to 3.59% from 1.46%.

It was the largest one-month spike since Fitch Ratings began tracking the metric nearly 16 years ago.

The hotel and retail sectors are seeing the worst delinquencies, as the coronavirus has been especially hard on those industries.

Carl_R
Carl_R

Covid accelerated trends that were already underway, such as working from home, and shopping online. They may backtrack a bit as covid relaxes, but then the trend will resume. Things will never again be "as they were".

tokidoki
tokidoki

Dow 100 million then?

Stuki
Stuki

"The decline in value is the bigger issue for the city to face"

As any even half sentient shopper is able to comprehend intuitively: A decline in price, for the same exact good, leads to an increase in value. Not a decline. Manhattan office space, is a much greater, not lesser/declined, value, at $10/square mile, than at an artificially pumped up $million a square foot.

We are talking the immediate neighborhood of the largest Fed welfare office of them all, so I suppose the decline in sentience shouldn't come as too big a surprise....

anoop
anoop

best time to buy is when there's blood in the streets. just be careful to not catch a falling knife. haha

awc13
awc13

perfect storm. taxes had been increasing for a while along with out of control homelessness. add covid and these cities refusing to enforce the rule of law and we will see severe decline in these cities

El Capitano
El Capitano

Maybe when NYC goes BK people will just stop listening to anything that the liberal keynesians there have to say. Their opinion isn't worth spit yet they love to spew it as if it had value.

tokidoki
tokidoki

Inflation in services. Some quotes from Service PMI.

“Inflationary pressures intensified for the first time since February at the end of the second quarter, as both input prices and output charges increased,” IHS Markit added in its Services PMI.

“Companies registered a solid rise in cost burdens as some suppliers hiked prices following the resumption of operations at service providers. The rate of input price inflation was the fastest since February 2019,” it said.

“In response to higher input costs, firms partially passed on higher supplier prices to clients through greater selling prices. The increase was solid overall and the sharpest for 16 months,” it said.

JanNL
JanNL

They seem to be intent on making NYC a hellhole. Don't need much taxes for that.


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