Long Island enjoys Golden Age

Strong market fundamentals, favorable debt financing and investors flush with equity have all combined to bring about the "Golden Age" of Long Island's investment sales.

In 2004 alone, the brisk pace of activity included 15 major office properties selling for an aggregate price of $300 million.

With more than 2.2 million square feet trading hands, 2004 surpassed all three previous years in terms of sales activity.

Local and regional entrepreneurial investors, as well as REITs and institutional buyers, were the major players driving the sales activity.

For example, Reckson Associates Realty Corp., a leading REIT, sold 400 Garden City Plaza in Garden City for $30 million and 120 Mineola Boulevard in Mineola for $18.5 million, while acquiring 300 Broad Hollow Road in Melville for $41 million.

In addition, GHP Properties, a Westchester based entrepreneurial investor acquired 585 Stewart Avenue in Garden City for $19.5 million and the Jobco Portfolio consisting of seven properties throughout Long Island for $40 million, while at the same time it sold 560 Northern Boulevard for $14.65 million.

Bank consolidations and mergers provided additional impetus for investment sales during the past year. In fact, bank mergers resulted in several large office sales in the market during the third quarter of 2004, a trend that is continuing into 2005.

For example, JP Morgan Chase has put three buildings on the block in Hicksville totaling 420,000 square feet. These properties, which are situated adjacent to the Hicksville Long Island Railroad--a major transportation hub--are sure to fetch a premium sales price.

Although the Federal Reserve raised interest rates over the past couple of sessions, the overall rates have still remained relatively low. Currently, the 10 year treasury is at approximately 4.2%.

As long as the interest rates remain low, investment sales activity is expected to continue at its current robust pace.

In contrast, if interest rates rise significantly, we may see a disconnect between asking and selling prices.

COPYRIGHT 2005 Hagedorn Publication
COPYRIGHT 2005 Gale Group