Building Sales Report May Be Bad News for City

In what likely portends to a tough year for real estate sales, a new report shows the number of apartment buildings sold citywide plunged during the second half of 2007, though sales prices increased slightly.

The report to be released today by the brokerage firm Massey Knakal Realty Services is one of the first to look at the pace of building sales during the second half of last year. It found that the number of apartment buildings sold fell 16.9% compared with the first half of 2007, to 1,725, and dropped 7% year-over-year. Meanwhile, the median price of buildings citywide increased slightly in the second half of 2007 versus the first half, to $234 a square foot from $231.

The report, which focuses on the sales of walk-up, elevator, and mixed-use buildings between July and December 2007, found that in Manhattan, the pace of sales fell 27% compared to the first half of last year, with 224 buildings changing hands. In Manhattan below 96th Street, the number of walk-ups sold fell nearly 50%, to 95, while the sales of mixed-use buildings fell by 1.1% compared with the first half of 2007, to 88. The only increase below 96th Street was in the number of elevator buildings sold in downtown, which jumped 13.5% compared to the first half of the year, to 37.

In Manhattan, the median price for elevator buildings south of 96th Street reached $527 a square foot, up 1.9% from the first half of 2007, while at $940 a square foot, mixed-use buildings were unchanged from the first half of last year.

This "shows that sellers have not been willing to lower their prices, and that there is still enough demand that those who can wait for the right buyer are able to achieve the pricing that they want," the chairman of Massey Knakal, Robert Knakal, said. "There's still — albeit at a lower level — a healthy level of volume in the marketplace."

While there may still be demand, growth in sales prices is "flattening out," the managing principal of the real estate appraisal firm Miller Cicero, John Cicero, said. Mr. Cicero, who prepared the report for Massey Knakal, added that this stabilization in sale prices in 2007 will likely lead to lower prices this year, as the city begins to feel the impact of the credit crunch. "One may expect to see prices come down as the next step," he said.