More foreclosed properties are expected in New York City’s commercial sector as vacancy rates continue to rise and as rents continue to fall in the city.
According to analysts at brokerage firm Marcus & Millichap, over 180 major commercial buildings in Manhattan worth $12.5 billion are troubled. Some have not been making their mortgage payments; others are already in foreclosure. Several have filed for bankruptcy protection.
Peter Von Der Ahe of Marcus & Millichap said that the last two years have been the worst he has seen in his 12 years in the commercial real estate industry. Rents for office space have fallen faster over the last two years than any other two-year period in the past 50 years, according to Richard Persichetti of Grubb & Ellis.
Aaron Jodka, chief economist at Boston-based real estate advisory firm Property and Portfolio Research, predicted that the value of office buildings in the New York metro area will fall by a total of 58 percent from their peak values in the latter part of 2007. Values have already plunged by 40 percent. He added that New York will suffer among the biggest losses in commercial property values in the country as more office buildings will default and enter foreclosed properties listings.
Developers and property owners are not the only ones suffering from the meltdown of the commercial property sector. City services are also affected as tax revenues from residential and commercial buildings drop sharply when buildings are vacant.
According to the New York Real Estate Board, total tax revenues from commercial and residential projects over the seven-year period to 2007 reached $307.7 million excluding property taxes. During the same seven-year period, the real estate sector added $12.4 billion to the city’s economy, such as construction wages and purchases by workers.
Michael Slattery, vice president for research at the board, said that the tax base associated with the commercial property sector is enormous. He added that a lot of basic services are being funded by taxes from the commercial sector.
According to Persichetti, New York City is fourth in the country in vacant office space, next only to Chicago, Washington, D.C. and Boston. He predicted that a major recovery will only happen in 2014.
Meanwhile, Robert White, head of Real Capital Analytics which tracks distressed and foreclosed properties in the city, said that foreign investors are expected to buy commercial properties in better conditions and in better locations while the city will bear financially struggling buildings in less desirable locations.
Author Resource:-> Original Post: Foreclosed Properties Expected in New York Commercial Sector on BankForeclosuresSale.com.
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