Real Estate Execs Increasingly Think Commercial Property in New York Is Overvalued -- and Many BelieJune 11, 2014
NEW YORK, NY--(Marketwired - June 11, 2014) -
New York commercial real estate executives are increasingly likely to say commercial property in the city is overvalued in comparison with real estate in other major global cities. In fact, many believe there is an asset bubble, thanks to low interest rates.
Those are among the findings of accounting firm Marks Paneth's spring 2014 Gotham Commercial Real Estate Monitor, a survey top New York City commercial real estate professionals, including owners, brokers, agents and attorneys and accountants specializing in the sector.
Nearly half -- 47% -- of executives said they think commercial properties in New York are "moderately overvalued" compared with property in other major global cities. This represents a nine-point uptick in the sentiment compared with June 2013 and a three-point uptick from January 2013.
Relatedly, 31% of commercial property executives said they believe low interest rates have created an asset bubble in the city's commercial real estate market -- similar to the housing bubble of 2005-2007. At the same time, more than a quarter of executives (26%) said they do not believe there's an asset bubble. The remainder said "maybe" or that they weren't sure.
Despite Overvaluations and Potential Asset Bubbles, Commercial Property Isn't a Risky Investment in New York
At the same time, property executives continue to believe commercial real estate in the city is a sound investment. Most executives -- 54% -- say investing in commercial property in Manhattan is either definitively low risk (36%) or moderately low risk (18%). Only 4% said it's high risk. Interestingly, executives called Brooklyn commercial property lower risk than Manhattan commercial property. Fifty-eight percent put Brooklyn at the low-risk and moderately low-risk end of the spectrum.
"In short, the real estate community is saying commercial property in New York is expensive -- maybe too expensive -- but that it's probably worth it, if you can afford it and structure deals carefully," said William H. Jennings, Partner-in-Charge of the Real Estate Group at Marks Paneth.
To receive a copy of the Spring 2014 Marks Paneth Gotham Real Estate Monitor and/or to speak with a leader from Marks Paneth's Real Estate Group, please contact Katarina Wenk-Bodenmiller of Sommerfield Communications, Inc. at Katarina@sommerfield.com or 212-255-8386.
The Gotham Commercial Real Estate Monitor from Marks Paneth represents the findings of a survey of nearly 100 commercial real estate professionals in the New York City market. Professionals participating in the research include owners and managers of commercial property, commercial real estate brokers and agents and attorneys and accountants specializing in the sector. The research employed self-administered questionnaires completed online by respondents. The list of professionals surveyed was compiled by Marks Paneth LLP, the research sponsor, and by Michaels Opinion Research. Interviews were completed during the period of March 3rd to May 7th, 2014.
About Marks Paneth LLP
Marks Paneth LLP is an accounting firm with over 500 people, of whom approximately 65 are partners and principals. The firm provides public and private businesses with a full range of auditing, accounting, tax, consulting, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services, and energy clients. The firm has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle.
The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services. In addition, its membership in Morison International, a leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world. Marks Paneth LLP, whose origins date back to 1907, is the 33rd largest accounting firm in the nation and the 10th largest in the Mid-Atlantic region. In addition, readers of the New York Law Journal rank Marks Paneth as one of the area's top forensic accounting firms for the fourth year in a row.
Its headquarters are in Manhattan. Additional offices are in Westchester, Long Island and the Cayman Islands. For more information, please visit www.markspaneth.com.
Sommerfield Communications, Inc.