It’s been reported that big-name office building owners in the US are racing to get their properties listed to take advantage of soaring commercial real estate prices, before they miss the boat.
The Seagram Building in New York and the Willis Tower in Chicago, as well as numerous other notable buildings, have seen all or a part of their office space listed for sale by their owners, who are eager to cash in on the soaring prices being paid by returns-hungry investors who have grown disillusioned with the unpredictable stock markets of late.
With the economy in the US showing new signs of weakness, investments in commercial property have surged, something that has raised concerns in some quarters about which direction vacancy rates and office rents will go.
According to the latest report by Capital Analytics, the value of US office buildings’ new sales listings has shot up to a total of $8.7 billion, which is the highest level in three years. Meanwhile, the latest preliminary data available for the month of May shows that this value has increased even more – to more than $10 billion, which, if confirmed, would be the highest total in one month since the end of 2007.
Post-recession commercial sales were slow until quite recently, with lenders opting to hold onto their distressed properties instead of selling them. This has resulted in a lot of frustration for investors, who were hoping to profit from other people’s bad luck.
Just one week ago, it was reported by Green Street Advisors that office building values in Midtown Manhattan had jumped by an incredible 88% since the middle of 2009, when they reached record low levels.
However, it’s worth noting that the Green Street index is weihted towards high quality buildings in major urban areas. Suburban areas meanwhile, are reportedly still suffering from high vacancy rates as they were hit much harder by the economic downturn.