“A lot of clients are redeveloping and repurposing old office buildings, former Kmart and Sears stores, and big box spaces into entertainment centers and mixed-use developments,” said Richard Abramson, a member at law firm Cole Schotz. “Our clients who are in acquisition mode say that good deals are few and far between.”
New York, which continues to be a prime destination for international investors, continues to see a flood of capital despite softness in some segments of the market. “We’re still seeing a flight of capital from foreign countries into New York City,” said Jordan Metzger, a member of the firm. “The perception outside the U.S. is that New York metro commercial real estate is a relatively safe investment.”
While the city’s condo market has faltered, the for-rental apartment market has been solid. “In the New York City market, it’s no secret that condos have softened and slowed down over the last six to twelve months,” said Leo Leyva, a partner at Cole Schotz. “Year after year, cycle after cycle, multifamily residential investments are one of the more stable asset classes.”
Meanwhile, the office market continues to shine with risk-averse investors who are drawn to the number of jobs that have been created in the city. “Many do see the office market as a safer bet than high-end luxury condos,” said Metzger. “With the surge in the co-working market, many companies are outgrowing their co-working space and leasing larger blocks of office space in a variety of areas which could be a reason for the stability of the office sector.”
For shorter-term investors, now may be the time to sell and tap into gains from the recent run-up in prices. “Cap rates are at an all-time low, and not much movement can be done in terms of pricing,” Abramson noted.
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