New York’s office boom goes bust
If you think the commercial real estate market in Boston is reeling, just look south to the Hub’s arch nemesis.
New York, which led the nation with record shattering office tower sales and leases during the boom, is now leading the way downward as well.
During the boom years, Big Apple office towers were selling for $1,000 a square foot, or more in some cases. But now prices have plunged. And I mean really plunged.
The city’s top towers are now worth half that, with the best worth just $425 a square foot, according to one CB Richard Ellis broker quoted in a New York Times story on the meltdown in office tower prices.
Those sky-high sale prices were based on the expectation that the towers themselves would fetch rents of well over $100 a square foot.
Now those days of triple digit rents are fading fast, with New York’s battered banking and financial services sector having dumped 8 million square feet of space on the market.
Ironically, a number of deep-pocketed New York investors paid stunning prices for Boston office towers. Their brilliant game plan was to colonize the Hub with Manhattan-sized rents, to be paid for with $100 a square foot rents at top addresses like the Hancock tower.
Now the Hancock is facing foreclosure, with Broadway Partners tottering under the weight of the $1.3 billion the firm agreed to pay for the tower back in 2006. And instead of $100 a square foot rents, there’s a growing mountain of empty space in the iconic skyscraper.
So much for that New York trend.