Big companies have been snapping up Manhattan real estate in the last several months -- such as property investors UDR Inc. and Invesco Real Estate and private equity firm LaSalle Investment Management.
Outsiders from out of state, such as the Colorado-based UDR, the Texas-based Invesco and the Chicago-based LaSalle are staking their claim on the New York skyline by picking up large multifamily complexes. They have the advantage, says Robert Knakal, chairman of local commercial property brokerage Massey Knakal Realty Services, of not being "clouded by the history of the market", which might make them more hesitant to invest.
The strong demand for Manhattan properties has raised prices and lowered investment yields. Capitalization rates on multifamily buildings in New York were 5.1% on average in Q4 2010, compared to the national figure of 6.6%. But buyers expect the capitalization rates to rise, due to a recovering job market and to undersupply driving up rents.
The average monthly rents in Manhattan have already gone up year on year by 8.6% (for one-bedroom apartments), 9.6% (two bedrooms), 12% (three bedrooms), and in general have rebounded 11% from the low point reached in January 2010.
As rents go up, NewYork City continues to be the U.S.' top city in which leasing a home is more affordable than buying it.