As Wall Street Journal reports, New York City has seen a rise in New York retail sales for condos , driving up sale prices in tourist districts, as well as in nearby areas where residential development is underway.
Manhattan real estate attorneys want to underscore the fact that while these kinds of transactions can be smart investments – in some cases yielding high returns – they should never be completed without thorough legal review. Investors and buyers need to be assured that the terms are fair, that there will be no issues in using the property for the intended purpose and that the investment makes good financial sense.
Many of these spaces may also be leased, and the terms of those agreements must be carefully reviewed as well.
The Journal reports that the number of retail-property sales (primarily condominiums) has increased three-fold from 2010 and 2013. The value of those sales also ballooned, from $610 million to nearly $3 billion. This year, retail sales are on track to surpass $3.6 billion.
Part of the momentum for this unprecedented growth has to do with the influx of international tourists. New York has always been a destination for world travelers, but more than usual have been flocking to the state in recent years, analysts say.Retail condominiums in particular are a hot item for a few reasons. One has to do with the fact that the costs for maintenance are generally lower than for residential properties.
Plus, investors are finding that buying a single retail condominium tends to be far more manageable than what it would cost to rent long-term or buy up a whole building.
Such investments have become increasingly popular along Madison and Fifth avenues. In these spots, the average rent ranges anywhere from $1,300 to $2,500 per square foot. These are the areas that are seeing the most amount of tourist traffic, so leasing prices are at a premium. Sales costs are higher as well, but investors and some businesses are finding those costs more easily justified because the values are expected to continue to increase.
Retailers are finding that by purchasing a smaller property, rather than renting a larger one, they can potentially save hundreds of thousands of dollars or more over the life of their business. This way too, the company has an asset, something to trade if business takes a downward turn.
Take for example the retail condo at the base of Mercer Street and Broadway, which just sold for about $42 million. By the summer of 2012, that same property sold for $57 million. The following year, it sold again, this time for $80 million.
Still, it’s not just the high-end retail districts that are drawing attention. Other areas that are attractive include those where residential condominium development is thriving, transportation hubs are thriving and places where there is generally a lot of foot traffic.
By focusing on up-and-coming neighborhoods, particularly in the outer boroughs, investors and businesses are hoping to get the most for their money.
The Wright Law Firm is a business law firm located in Midtown Manhattan. Call (212) 619-1500 for a confidential consultation.