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Domain Properties consists of principals and brokers who are market savvy, professional, committed, and genuinely interested in our client’s needs. Whether you are looking to sell your property, or acquire new assets, our experienced and educated team will work diligently to negotiate, secure and close, the best deal for you.
With a strong working knowledge of the commercial real estate market, both in the United States and internationally (we speak nine languages between us), Domain Properties is able to efficiently and effectively assist investors with the acquisition and sale of real estate. It can be a few hundred square feet of office space in Manhattan or a 1 tenant building, either way, our diverse team has the knowledge and contacts to deliver.
As Domain Properties continues to grow, we are also developing long lasting, and profitable, relationships with our clients.
Commercial Real Estate NYC - Building Class Definitions in New York City
Commercial real estate (NYC) is a preferred market for investors. Due to the recent economic downturn, analysts had predicted the collapse of U.S. commercial real estate. Yet this sector is on the rise rather than headed for a fall.
Recently, however, a Federal Reserve official informed a congressional committee that the market had been near bottom. Indeed, there had been far worse predictions for U.S. commercial real estate. Analysts believed that the market would fall, bring the economy back towards a recession, and create a crisis in the banks.
Across the country, commercial real estate shows overall improvement. Obviously, the sector would not have been expected to thrive in a recession. Yet the commercial category stays in business. The sector has no place to move only upward in the aftermath of economic turmoil. Better performance and higher profits can be expected in this market especially in dynamic centers such as New York City.
In 2010, market fundamentals stabilized and the sector took an important step towards recovery. Signs of stabilization were the result of more demand for commercial space. The popularity of Manhattan properties among buyers and investors points to the promise of Commercial Real Estate NYC.
Office real estate in New York City provides excellent opportunities for buyers and investors. Although NYC was not as affected by the economic downturn as the rest of the US, every area of the country felt the recession to a certain degree. Since New York City businesses have national and international connections, its commercial real estate had to deal with the effects of economic strife elsewhere. Of course, New York City is a historically-sound market that survives and thrives despite of adversity.
During this period of economic recovery, the real estate industry puts its best effort into attracting buyers to NYC offices. The industry is willing to make concessions to match up owners with profitable Manhattan properties. 'Office Buildings For Sale' In New York City is a buyer's market – and a good deal for sellers.
Today is the perfect time to offer that office building for sale in Manhattan. Domain Properties, experts in New York City real estate, have gained recognition for their expertise in working with buyers and sellers of commercial NYC real estate. The Domain Properties Commercial Real Estate NYC team offers discreet and confidential 'person-to-person' dealings with clients about Manhattan properties.
In a 2010 survey by the Society of Industrial and Office Realtors, 57% of the participating 600 market experts predicted improvements in the office and industrial sectors throughout the year. Vacancy rates in office space started to level off in 2010 and should improve dramatically by the end of this year. Even during 2010, New York City (as well as Long Island, N.Y., and Honolulu) showed low vacancy rates in the office sector.
In fact, New York City demonstrated one of the lowest vacancy rates. Entrepreneurs recognize the power of being in business in a global center like New York City. Honolulu and NYC had office vacancy rates close to 9% while other office markets recorded rates over ten percent.
At present, NYC office space looks attractive to tenants - especially with offers of lower rent. The cost of rent for office space was expected to fall 2.7% during 2010 and an additional 2.1% in 2011. In 2010, The National Association of Realtors (NAR) suggested that the vacancy rate for office space should show a slight rise at 16.7% towards the end of the year.
The vacancy rate, however, is expected to decline slowly and reach 16.4% in the last quarter of 2011. More tenants will be searching for Manhattan properties. The renewed interest is an encouraging sign for existing office spaces as well as new developments. Obviously, upscale office buildings have higher rents and attract powerful investors, prestigious tenants, and affluent clients.
The December 2010 sale of 111 Eighth Avenue to Google, Inc. for $1.8 billion was the biggest office building sale of the year in terms of price. The sellers were Taconic Investment Partners, Jamestown and New York State Common Retirement Fund. Once the headquarters of the Port Authority of New York and New Jersey, the 2.9 million sq ft building is now owned by Google. The corporation will occupy 500,000 sq ft as the largest tenant.
Although commercial real estate NYC is a winning investment, not all buildings are created equal in the Big Apple. NYC office buildings (like office buildings across the US) are classified as Class A+, Class A, Class B, and Class C. Keep in mind that a Class A building in a small town might not have the same characteristics as a NYC Class A property.
Definitions of building class vary according to markets. Buildings are classified relative to other properties in their market. Commercial real estate agents, as well as owners and managers, organize office space into "classes." The groups use various factors to define the different office environments.
Class definition is not a 'definitive' science and has no formal or international standard. The classifications refer to certain specifics. Class B and Class C classifications within a market will depend on the characteristics of the Class A buildings. A commercial real estate practitioner will determine the Class A buildings (based on prime location, full-service amenities, and other guidelines) and proceed to label other buildings relative to those results.
Generally, the Building Owners and Managers Association International (BOMA) is opposed to publishing the classification rating for individual properties. If potential tenants understand the basics of the classification process, this information could give them more insight into a building. If tenants think, however, that Class A in a rural community means the same thing as Class A in Midtown Manhattan, BOMA would be justified in their objection. In that instance, the tenant would not have the proper information and could not make an informed decision.
The purpose of the rating system is to encourage standardization of discussion about office markets (including individual buildings) and to encourage the reporting of office market conditions in the different classes. Yet BOMA insists vehemently that the organization does not agree with publication about individual buildings. The metropolitan base outlining the main Class A, B, and C definitions is used within an office space market.
Class A+
* High-rise building with prime central business
* Landmark quality
* District location (the best of the Class A buildings)
Class A
* Built since 1980
* Concrete and steel construction* – Expert construction
* Highest quality materials and finishes – Attractive buildings
* High quality building infrastructure
* Generally, 100,000 sq ft or larger - Five or more floors
* Strong identifiable location - Convenient access (public transportation,…)
* State-of-the-art systems according to BOMA guidelines
* Business/support amenities
* Professional manager
* Premier tenants
* Highest rental rates
* Definite market presence
* Certain cities use type of building materials to determine classifications.
For example, Riverside, California specifies steel frame for Class A buildings and concrete and masonry for Class B buildings.
Class B
* A grade below Class A
* Slightly older buildings – Good management - Quality tenants
* Building finishes – Fair to good
* Good quality systems – not at Class A level
* Can be targeted by investors planning renovations to restore them to Class A
* Well maintained – Functional
* Average rental rates
* Good tenants
Class C
* Lowest grade for useable office buildings.
* Older office buildings (usually, 20+years)
* Located on less desirable streets in older sections of the city
* Higher than average vacancy rates for their market
* Less impressive architecture
* Limited infrastructure
* In need of extensive renovations
* Antiquated technology
* Lower rental rates - Difficult to lease
* Often targeted for re-development
* Tenants requiring functional space
In addition to the above classifications, potential office tenants must consider a variety of other factors.
* Security and life safety infrastructure
* Backup Power
* Elevator quantity and speed
* HVAC capacity
* Floor load capacity
* Ceiling height
* Common area improvements
* Parking
* Nearby amenities (restaurants, dry cleaning, ATM,… )
The international base is for use by investors among several metropolitan markets.
Investment quality properties are unique buildings located in the best metropolitan markets in the world. These properties are classified as outstanding not only on the local or national scene but within the international investment community. Obviously, upscale NYC properties would fall unto this category.
Since investors use this gauge, it is easy to understand the intense interest in the luxury market in New York City. As well, triple net properties in NYC can be a safe investment for a first-time investor. Domain Properties provides expert handling of sales for commercial properties, triple net properties in NYC, office buildings, and residential properties, as well as 1031 exchange properties.
* Located in premier metropolitan area
* Design and construction quality
* Highest quality finishes
* State-of-the-art systems
* Mix of exceptional amenities
* Outstanding building management
* Solidity of tenants
* Solid tenant markets
* May house a tenant for whom property is named
Investors can purchase 'trophy' material without buying investment grade properties but, usually, trophy properties are investment grade. Michael Vargas, a principal and co-founder of the Vanderbilt Appraisal Company defines trophy properties as those in the top 1% of sales.
According to Vargas, trophy properties in New York City can carry a price tag of $10 million or more. Vargas says that he uses the $10 million figure because sales of that caliber were almost commonplace before the economic downturn. Properties in the $20 million range were the source of excitement in Manhattan before the housing crash.
Yet there is differing opinion about the price needed to buy trophy properties in New York City. Sixteen of the city’s top-selling brokers, as well as three appraisers, named amounts from $10 million to $45 million. Several agents gave higher prices for uptown (and for town houses) than for downtown.
One agent thought a buyer would pay $40 million for a trophy apartment uptown but only $25 million downtown. Another agent said $25 million for an uptown apartment and $15 million for downtown trophy apartment. Maybe Vargas gives the best definition of trophy properties - “ rare, special and coveted by many, like a Picasso.” One of the biggest NYC real estate deals in 2010 involved a trophy building. Designed by the renowned architect Robert A. M. Stern, the penthouse at Superior Ink in the West Village was sold for $31.5 million.
According to Jones Lang LaSalle's winter 2010 Skyline Review, Midtown's trophy office buildings showed an increase in average asking rental rates. Between June-December, rent for the submarket's high-end buildings rose by 6.8 percent. Rates for upscale spaces in Midtown increased to $77.65 per square foot in winter 2010 from $72.71 per square foot at the beginning of the year.
* Sufficient size and stature that they merit attention by large national and international investors
* Good design and construction - rarely monumental design or first-class construction materials
* Maybe located in secondary metropolitan
* Possess a stable tenant base
* Conformed to popular design conventions at the time of construction
* No exceptional materials or construction methods
* Functional design and construction – Not focused on aesthetics or image
* Design hardly ever reflects the image of any particular tenant or occupant
* Large building to attract national and international attention
* Minimum size requirements are lower for properties located in premier office markets
* Often occupied by multiple tenants
Commercial real estate NYC is in a class by itself. The NYC market has all the essentials for profitable investment. Expect to see more buyers and investors showing an interest in Class A, Class B, and Class C office buildings for sale in New York City. Interest is building among investment communities in all classes of Manhattan properties.
