Manhattan Commercial Real Estate Office Sales Plunge 91%

In Manhattan, commercial real estate office sales reach standstill.

Only three Manhattan office buildings worth more than $30 million were sold in the first half of year, as buyer and sellers failed to agree on pricing and credit stayed tight, according to a report by real estate services company CB Richard Ellis Group Inc(CBG).

"Buyers are seeking distressed pricing," said the report released on Tuesday. "Owners do not want to sell at distressed pricing, and lenders have largely withdrawn from the market."

"When the CMBS market shut down, that really shut off the financing mechanism that allowed a lot of these large transactions to get done," Enoch Lawrence, senior vice president, CBRE Capital Markets, said in a statement.

The three sales compare with an average 32 seen in the first half of the past five years, the report said. Sales of office buildings valued at more than $30 million, fell to a total of $767.5 million in the first half of the year, 91 percent off the five-year average of $8.2 billion.

Fed Extends TALF Program for Commercial Real Estate

Given the preceding story, one should not be too surprised by this headline: Fed Extends TALF Program for Commercial Real Estate.

The Federal Reserve extended by three to six months an emergency program aimed at restarting credit markets, a move that may cushion the commercial real- estate industry from rising defaults and falling prices.

The Term Asset-Backed Securities Loan Facility, with a capacity of as much as $1 trillion, will expire June 30 for newly issued commercial mortgage-backed securities, instead of Dec. 31, the Fed and U.S. Treasury said today in a statement in Washington. For other asset-backed securities and CMBS sold before Jan. 1, the plan was extended three months to March 31.

Policy makers also left the door open to prolonging the program beyond the new expiration dates, saying they “will consider in the future whether unusual and exigent circumstances warrant a further extension.”

Separately, the Fed is buying as much as $1.25 trillion of residential MBS this year to lower interest rates in housing.

Buyer of Only Resort to the Rescue

The Fed along with government owned Fannie Mae and Freddie Mac, and the FHA (Ginnie Mae) are the buyers of only resort for residential mortgages.

Now the Fed is looking to pour a $trillion into commercial real estate.

Also note that one in nine are on food stamps, and Benefit Spending Hits $2 Trillion, Highest Percent Since 1929.

Those numbers are from June. They are undoubtedly worse now.

Mike "Mish" Shedlock