Nadel & Ciarlo, P.C.

Is commercial property in New York overvalued?

The commercial real estate market in New York City is pretty hot right now, and the prices of commercial properties in the city are much higher than other major cities in the U.S. However, a new survey found that commercial property in Manhatten may be overvalued, according to Marks Paneth & Shron, a New York accounting firm.

Their survey found that 54 percent of property executives felt commercial property in New York City was overvalued compared to other major cities, while 28 percent said properties were fairly valued in New York. The survey conducted is an annonymous survey taken by New York property executives.

The belief that commercial property in New York is overvalued is not new. Previous suveys have found the same opinions from New York property executives during the last decade. Why do so many think properties are overvalued in Manhatten?

Some theories about why commercial property is overvalued in New York are that real estate executives think foreign investors are causing values to increase in Manhatten right now but the values are not likely to remain this high or continue to increase back to property values seen before the recession.

The impact of foreign investments in New York seems to be taking a toll on property values in the commercial real estate market. The same survey found that 47 percent of executives felt that foreign investors have a big influence on commercial property being overvalued.

The commercial real estate market in New York usually sees higher values than other large cities in the U.S. However, recent foreign investors may be impacting the value of commercial property more than many people think. The reasons why values have increased or seem overvalued are important factors to consider when thinking about investing in commercial property in New York. Investors should be aware of the ways values may change and take appropriate steps to protect their investments.

Source: Real Estate Weekly, "Survey: NYC commercial properties overvalued," Aug. 14, 2013

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