Office Owners Seek to Cash In
Big-Name Buildings Go on Block as Prices Boom; 'Who Knows What Market Will Be Like' in a Year? says Tim Jaroch, one of the general partners who own the 1.4 million-square-foot Constitution Center.
Until recently, post-recession sales activity in the office market has been slow. Lenders have held onto distressed assets rather than sell them, frustrating many investors who hoped to take advantage of the pain of others. Even as values rise, many owners continue to resist selling because they don't like their options for investing the proceeds.
The sharp rise in values has come over the past year, a relatively short time frame in the real-estate market. Recent deals include the sale of 750 Seventh Ave. in New York's Times Square by Hines Interests for a surprisingly high $485 million and Beacon Capital Partners' sale of Market Square in Washington for a record $905 a square foot. Beacon also is considering bringing to market 1211 Ave. of the Americas in coming weeks, for which the company would look to retrieve well above the $1.5 billion that it paid in 2006, according to people familiar with the matter.
Building owners in some office markets contrast sharply with the residential market, where home prices have declined for months. Last week, the S&P/Case-Shiller Home Price Index reported home prices were down 4.2% in the first quarter of 2011.While new buyers are betting on a strong future in the market, the high prices—back so rapidly from the market's trough—have given some investors pause. Building owners in some office markets contrast sharply with the residential market, where home prices have declined for months. Large New York City developers, including Douglas Durst, have said prices have risen too high to justify acquisitions.
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