SOURCE: Marks Paneth LLP

Marks Paneth LLP

September 24, 2014 10:45 ET

Have Low Interest Rates Created a Commercial Real Estate Bubble? Yes, Say Real Estate Executives, With Growing Confidence -- but They Also Say That Valuations Aren't out of Line

Professionals Say Foreign Investment Is Inflating Property Values, According to Marks Paneth Survey

NEW YORK, NY--(Marketwired - Sep 24, 2014) - Is an asset bubble forming in New York City's commercial real estate market? Yes, say New York property executives, with increasing confidence. More than a third (37%) say they think low interest rates have created a bubble similar to the housing bubble of 2005-2007, according to a survey of 100 top-level New York City commercial real estate executives, including owners, brokers, agents, engineers, accountants and lawyers specializing in the commercial space.

But despite bubble concerns, most executives think that commercial property valuations aren't out of line -- at least when compared with other major global cities. These are among the findings of the Summer 2014 Gotham Commercial Real Estate Monitor survey by accounting firm Marks Paneth.

The survey reports that most commercial property executives believe Manhattan commercial values are just right, or nearly so: 32% say properties are "fairly" valued, and 42% call them "moderately overvalued."

In fact, 9% seem to think that Manhattan prices are "moderately undervalued," up from 6% in the spring. Only a smaller number (17%) continue to believe that Manhattan commercial real estate is "highly overvalued."

"Consensus among executives seems to be that commercial valuations are high -- but that they accurately reflect the realities of the underlying market," said William H. Jennings, Partner-in-Charge of the Real Estate Group at Marks Paneth.

One factor driving commercial prices higher is foreign capital, the executives say. Over half (59%) of real estate pros say foreign investment has "a great deal of influence" on increasing property values in Manhattan.

To receive a copy of the Summer 2014 Marks Paneth Gotham Real Estate Monitor and/or to speak with a leader from Marks Paneth's Real Estate Group, please contact Katarina Wenk-Bodenmiller of Sommerfield Communications, Inc. at Katarina@sommerfield.com or 212-255-8386.

Methodology
The Gotham Commercial Real Estate Monitor from Marks Paneth represents the findings of a survey of commercial real estate professionals in the New York City market. The 100 professionals participating in the research include owners and managers of commercial property, commercial real estate brokers and agencies, and attorneys and accountants specializing in the sector. The research employed self-administered questionnaires completed online by respondents. The list of professionals surveyed was compiled by Marks Paneth LLP, the research sponsor, and by Michaels Opinion Research. Interviews were completed during the period of June 17 through July 11, 2014.

About Marks Paneth LLP
Marks Paneth LLP is an accounting firm with over 500 people, of whom 65 are partners and principals. The firm provides public and private businesses with a full range of auditing, accounting, tax, consulting, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services, and energy clients. The firm has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle.

The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services. In addition, its membership in Morison International, a leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world. Marks Paneth, whose origins date back to 1907, is the 33rd largest accounting firm in the nation and the 10th largest in the mid-Atlantic region. In addition, readers of the New York Law Journal rank Marks Paneth as one of the area's top three forensic accounting firms for the fifth year in a row.

Its headquarters are in Manhattan. Additional offices are in Westchester, Long Island and the Cayman Islands. For more information, please visit www.markspaneth.com.

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