Column: Hot Days, Hot Market

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By Allan Murphy
Sentinel Business Columnist

The hot days of summer are currently mirroring a hot commercial real estate market, at least as far as Greenwich sales are concerned.

Several large commercial properties have recently sold or are under contract to sell. In western Greenwich these sales include 500 West Putnam Avenue ($337 per square foot), 411 West Putnam Avenue ($519), and the eight-building Greenwich Office Park, currently under contract for sale. These three properties alone total about 650,000 square feet and account for about one-third of all the office space in western Greenwich.  That is a lot of new ownership in a period of a few months. It should be good for the buildings and the market, as new ownership brings new ideas, usually updating of the properties and spaces, and new vitality. That sometimes comes at a cost (higher rental rates), but the western Greenwich market has firmed up, with rental rates already headed higher in the last few months.

Central Greenwich sales activity is also strong, with numerous retail and office buildings selling over the last eighteen months, including numerous sales that exceeded $1,000 per square foot. These have included 16 Greenwich Avenue ($1,300 per square foot), the Jonathan Adler building at 88 Greenwich Avenue ($1,100), the newly renovated Perfect Provenance building at 47 Arch Street ($1,200), the Giggle/Lacoste building at 98-102 Greenwich Ave ($1,024), the Wells Fargo building at 28 Havemeyer Place ($1,350), the former Betteridge Jewelers building at 117 Greenwich Avenue ($1,070), and the former (long ago) Van Driver building at 24 East Elm Street ($1,170). That’s a lot of property trading hands at pricing that suggests a strong belief in the future of Greenwich commercial real estate! Some of the pricing is driven by the high retail rents on the ground floor, but all of the foregoing properties have office and/or residential space as well.

Other recent downtown sales include the Bank of America building at 240 Greenwich Avenue ($719 per square foot), the Shreve Crump & Low building at 125 Greenwich Avenue ($793), the former Healthmart building at 30 Greenwich Avenue ($840), the just-renovated Houlihan Lawrence building at 2 Soundview Drive ($910), and, last week, the Greenwich Bank & Trust building at 115 East Putnam—at $580 per square foot for just the land, and generating just a 3 percent current return for the buyer. Finally, we understand that the “top of the Avenue” may soon have new ownership, with several buildings on the southwest corner of Greenwich Avenue and West Putnam now under contract for sale. 

Once again, wow, that’s a lot of sales activity in a short period of time. What’s going on? 

It seems that Greenwich sellers continue to benefit from a broader and ongoing market demand for quality product. Interest rates remain low, international capital continues to flow into US real estate (and accounts for some of the Greenwich sales mentioned above), and future international investment mandates may be shifting away from Europe to the benefit of the US.  The average “cap rate” (a standard real estate measure of the first year’s return on a real estate investment) for all US property types is 5.2 percent, well above current yields on government bonds for the major industrialized countries. Manhattan is by far the top US real estate destination for international capital (and a close second only to London overall), and no doubt Greenwich benefits both from its proximity to Manhattan and as its own small but highly regarded commercial real estate market. Let’s hope the hot days continue.

Allan Murphy is a senior managing director at the commercial real estate services firm Newmark Grubb Knight Frank. He has specialized in the Greenwich and Stamford markets since 1996.

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