The Real Estate Market Is Experiencing A Decline Due To The Ongoing Crisis And Some Experts Can’t Even Say Anything About It
Aby Rosen controls some of the most notable office towers in midtown Manhattan. He initially put forward a deal worth $400 million to purchase a 600,000-square-foot office tower, with 36 stories. However, he has decided to postpone the agreement to acquire the property located at 900 Third Avenue.
People with direct knowledge about this transaction said that Rosen would carry forward with the venture once the coronavirus pandemic is over. When a spokesperson for the firm was questioned about the story, she declined to share the truth behind it.
Chaos and uncertainty has taken over real estate
The recent hold on the deal by Rosen reflects the pure panic and chaos that is currently engulfing the real estate market due to the pandemic. The ongoing uncertainties and concerns arose because social distancing made it impossible for people to occupy the office spaces. On top of that, more retail tenants are avoiding the rents to make other payments.
Banks are not acting as lenders anymore
Banks and other lending institutions are cutting back on real estate deals because no one knows for sure just how long this crisis will encumber the e-commerce as well as the daily life of everyone. It’s also uncertain whether the crisis will cause a recession and will put the market on a complete slowdown. Though some banks are still lending, their potential clients are still hyper selective about it.
The once-booming sales market is experiencing a decline
New York saw about $30 billion worth of commercial real estate being sold in 2019, as almost $5.5 billion of the property was sold in the first quarter of that year. The market during that time saw a decline of 11% as compared to the numbers of 2018. However, with the scenario right now, the sales market has become extremely cautious. It’s easy to see why it’s now quite challenging to get new things to sell and sign new contracts.
Other sellers are pulling major deals from the market
Due to the unsteady sales market, sellers are either canceling or postponing large scale property offerings. A solid partnership among Brookfield Group and Blackstone Group recently pulled back on their deal of selling a 2.3 million-square-foot office tower in lower Manhattan. An insider said that the group was ready to sell the building for as low as $1.7 billion. Another real estate developer called Related has also pulled out from selling Equinox Hotel at 33 Hudson Yards, according to an official source.
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