A developer reportedly plans to break ground this fall on a boutique retail complex at the site of the former Nestle USA headquarters in White Plains.
One might do as well swooping in on an existing shopping center, vulture-style.
Commercial property values fell 2.3 percent nationally between February and March, according to Moody”™s Investor Service and Real Capital Analytics, the sharpest monthly drop this decade.
Retail property prices are off nearly 6 percent from their peak levels of the past year, more than double the drop of the office and industrial sectors. Moody”™s and Real Capital Analytics calculate the index by measuring the change in transaction prices based on repeat sales of the same properties at different points in time.
Investment volume is half the level of a year ago, the companies reported, adding that 63 percent of all sales nationally were valued under $7.5 million, down from a 47 percent figure a year ago. At the other end of the spectrum, just 4.5 percent of sales were valued at $50 million or more, down from 8.5 percent in March 2007.
Lease rates have largely stabilized after years of sharp increases. Exiting the previous recession, prices did not begin to rise significantly until mid-2003 for vacant commercial and industrial property in the New York City metro area, according to a study released last month by the Federal Reserve Bank of New York.
Other recent studies confirm a cooling commercial real estate market. Standard & Poors also recorded the steepest dive in real estate prices it has seen in 15 years, though prices are still up more than 4 percent from a year ago. S&P includes apartment buildings in its commercial real estate index. Office real estate dropped 1.9 percent nationally between January and February, according to S&P.
The freefall has not deterred real estate owners from putting properties on the market for sale ”“ last month the owners of the former Stewart Stamping plant in Yonkers put the facility up for sale. At more than 200,000 square feet, the facility is the largest industrial parcel available for purchase in Westchester County, according to broker C.B. Richard Ellis, which is marketing the property.
Simultaneously in Stamford, Conn., an industrial property triple that size owned by Procter & Gamble Co. hit the market as well. The former Clairol headquarters, now known as P&G Beauty, is being marketed by Cushman & Wakefield.
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The two facilities could concoct a readymade litmus test on the chemistry of the commercial real estate market in New York City”™s suburbs, particularly deep-pocketed buyers capable of handing redevelopment for new purposes like Core Plus Partners”™ redevelopment of the former Nestle USA site.
In New York City, whose commercial real estate market has a significant influence on that in the lower Hudson Valley, foreign real estate investors who helped bid up values there are largely on the sidelines now, according to a report late last month in The New York Times, as they wait to see how the market and larger economy fare.
Given the sharp drop in transaction volume noted by Moody”™s and Real Capital Analytics, real estate investors of all backgrounds appear to be biding their time for the time being, waiting to see more evidence of trends in sale prices and rents.
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