“With debt available and with interest rates so incredibly low, it encourages one to buy because money is so cheap,” he said. “If the asset class is in favor compared with what much of the alternatives are—if borrowing costs are incredibly low—it continues to steer people to want to invest in hard assets like real estate.”

Illustration by Peter Lettre.

Investment sales figures for the past few years bear this out. According to data from Cushman & Wakefield, the total volume of Manhattan investment property sales closed in 2011 was the third-highest total on record—at $25.8 billion. This marked an 88 percent increase over 2010, to levels not seen since 2007. And Massey Knakal’s Pricing Index, a measure of the change in price per square foot across all property types in New York City, registered a 6 percent increase in 2011 from the year before.

Still, experts said that velocity for the rest of the year, and whether it speeds ahead or screeches to a halt, is subject to a number of different factors.

Clearly the most unyielding of those is supply, which Helen Hwang, executive vice president of the Capital Markets Group at Cushman & Wakefield, recently described as “in check,” particularly for office space.
“The existing inventory is about 400 million square feet in New York—that’s just Manhattan,” she said.“The only thing that’s really under construction right now are World Trade Center Towers One and Four, which is about five million square feet, and you’ve got Boston Properties’ deal—250 West 55th Street, which is about a million square feet.” Ms. Hwang continued adding up square footage under construction in Manhattan and then subtracted the World Trade Center total, which, as she pointed out, is not new but replacing what has been lost.

“Effectively what’s under construction right now that will be added to the market is about 1.5 million square feet,” she concluded, “which is really not a lot for a market this size.” This leaves very little from which to choose, for buyers who experts say are keen on Class A office space.

On top of this, with the market still improving, not everyone is convinced that it’s a good time to sell. Plus, with a huge pool of real estate loans coming due in 2012, some partners just want out, leading to a trend that Ms. Hwang seemed reluctant to mention, given that it’s been bandied about so much.

“This has been said a great number of times,” she offered, “but we saw a great number of recapitalizations.” Last year, she estimated, 40 percent of total deals in the office arena were recapitalizations, whether to replace an existing partner or to infuse new equity into a deal that needed the capital.

“There’s not much out there—that’s what’s keeping pricing so high,” said Andrew Simon, executive managing director in the New York office of Colliers International. “I think that you’re going to see buildings that have maturing debt and they have to figure out what to do, how to hold on. That seems to be the primary story these days and that’s why you’re seeing deals like both Park Avenue Plaza and 299 Park—you saw the 49 percent interest in both buildings traded.”

Over at CBRE, Paul Gillen, a senior vice president in the Investment Properties Institutional Group, pointed out that his firm closed several major transactions last year, including the aforementioned 299 Park Avenue, with recaps as a theme. The Alaska Permanent Fund snapped up the Rockpoint Group’s 49.5 percent stake in 299 Park in a deal that revalued the property at $1.26 billion.

But with recaps serving as what Ms. Hwang calls a hedge in the improving market—sellers keep a portion, let a portion go—overall investment sales for 2012 are largely predicted to remain flat, a point Newmark Knight Frank president Jimmy Kuhn makes, with one caveat.

“In the very near term I don’t see velocity increasing that much because a lot of people in New York aren’t sellers,” Mr. Kuhn said, adding that that could change depending on one future condition. “And that is, if it appears that the administration is going to dramatically change the tax structure, people may bail out. That may be the linchpin to cause increased velocity. If people want to take the old capital gains tax rates before they change.” The current capital gains tax is set to expire at the end of the year and any new rate is up in the air, pending November’s presidential election.

Peter Von Der Ahe, who deals primarily with multifamily, agreed that the issue of capital gains could put pressure on sellers, providing an opportunity for foreign buyers in particular. The Marcus & Millichap first vice president of investments said that with “capital gains most likely increasing in 2013, there’s a financial incentive to sell your property this year.” He predicted that, for multifamily at least, as more buildings start to trade it will create a snowball effect of sorts. “It becomes self-perpetuating on the positive side, too—that’s what I see happening this year.”

As for the investment sales buyers, they constituted all the usual suspects in 2011, though institutional investor participation in the market rose to fill a gap left by private capital for the year. According to the Cushman & Wakefield data, institutional investors accounted for 36 percent of 2011’s total sales, REITs and private capital 26 percent each, and foreign investors 9 percent. For 2010, private capital was at 35 percent and institutional investors were at 15 percent.

Mr. Simon, at Colliers International, said that there is serious capital out there looking for a home. “Any of these big institutional, international groups have to look at New York as a safe haven.” He added that investors are looking for value-add opportunities and opportunities to boost returns, in a cap rate environment that has been low “for a very long time now.”

From Mr. Gillen’s perspective, REITs were obviously big in 2011 but there was another foreign influence, apart from, say, the Canadian REIT that bought 2 Gotham Center for $415.5 million in a deal he helped broker, or the Kuwaiti firm that paid $485 million—all cash—for 750 Seventh Avenue in another CBRE-brokered deal. “A lot of times, the name on the transaction wasn’t necessarily all the capital,” he said. “You had a lot of global capital backing the more traditional names in the city.”

Newmark Knight Frank’s Mr. Kuhn agreed. He anticipates foreign investors to continue looking for opportunities in New York. “But if they don’t team up with a local operator they will not be able to move fast enough and they will make a mistake,” he said. “Foreign buyers, if they don’t have a presence in New York and they don’t have an operating partner, I don’t see them as big competition.” He added that Newmark Knight Frank had just been hired by a large Australian group looking to partner with a local operator to build an office building.

Another barometer for investment sales velocity is leasing vacancy rates. Mr. Heller, at Studley, pointed to 200 Fifth Avenue, the old International Toy Center, where in 2010 the firm represented Tiffany & Co. in its 345,000-square-foot headquarters relocation. “The most recent rent paid was $85 a foot for a prewar building in Midtown South,” he said, “which had been a somewhat sleepy market for decades.” Drastically declining vacancy rates had changed all that.

Mr. Simon, fresh from a Grand Central District Office Building committee meeting, related how he had piped up about this lag between vacancy rates and the price a building can garner when sold. “I said to them, ‘I’ve been telling people for a long time that in the leasing market there continues to be a disconnect between what’s going on in leasing and what’s going on in investment sales,’” he said. “Because in the investment market there is very little product out there and what does come to the market sells at a very big price.”

At the end of the day, the ease of getting a loan for new development projects might be the best way to gauge investment sales velocity for the year. One source said he had just had lunch with a lender buddy from the workout department at a major bank, who described lending requirements as loosening and the bank as expecting to get paid off at par for loans still on its books.

Cgaines@observer.com

The way he sees it, there are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller at the right time.

To that end, Mr. Knakal figures he can either call you, or you can call him.

"During the early 1990s, after the recession and when the market was dismal, we used to have a contest to see who could get to 40 owners a day," Mr. Knakal recalled earlier this month.

"Even if that person hung up in your face."

Although it’s one of the biggest and most lucrative markets in the world, Manhattan’s real estate industry is famously close-knit. But for those who break into the club, assignments from clients and attention from the real estate press usually follows.

Still, few in the city’s commercial real estate industry have risen to Mr. Knakal’s prominence, and fewer still have labored as hard to do get there.

In what was once considered a novelty, Mr. Knakal, now a governor on the board of the Real Estate Board of New York and a columnist for The Commercial Observer, first garnered attention as a young broker by tracking real estate sales figures in the early 1980s—well before such careful analyses became commonplace at real estate firms.

Since then, he and partner Paul Massey, with whom he founded the brokerage firm Massey Knakal in 1984, have escalated the technical practice of data gathering and showcased ever more sophisticated skills.

In recent years, Massey Knakal has held regular quarterly breakfasts that showcase the blitz of detailed statistics and market measures it tracks. Even in an industry now brimming with data, the firm’s numbers stand out by virtue of the fact that it sells a higher volume of transactions than many of its rivals combined, meaning it can aggregate more data. And at the company, save for perhaps Mr. Massey, no one wields that data better than Mr. Knakal, using it as a tool for prognostications about the market.

“I’ve always been sort of a wonk with statistics,” Mr. Knakal said, modestly.

The pursuit has served him well.

When the real estate market crashed in 2008, even prominent brokers were left feeling washed up amid the dearth of deals that followed. Mr. Knakal seemed unfazed during the period. His knowledge of New York real estate’s ebb and flow, as well as his knack for weighing the impact of macroeconomic events on the local market, made him a sought-after consultant, as sellers and buyers alike struggled to uncover the new realities of value and demand. While the consulting work and portfolio evaluations he did during the time were either free or low cost services, it allowed him to both develop and deepen ties to major clients like banks and large private sellers and sow seeds for new business that would sprout when the market revived.

The work paid off. As sales picked up, Mr. Knakal became a leading seller of a popular product type of the time, mortgage notes, which banks were clearing off their balance sheets at a discount.

Last year, he sold a nearly $30 million mortgage for Barclays bank tied to a development parcel across from the West Side rail yards, 350-366 Tenth Avenue. Before that, in 2010, he sold the $60 million mortgage against the downtown office building 5 Hanover Square to the real estate group Savanna, which then took control of the property.

Mr. Knakal’s biggest year in sales volume happened, predictably, in 2007, when he sold approximately $800 million in real estate. For a capable dealmaker, the cards were stacked in his favor: The city was flush with easy capital, prices were at a peak, and both sellers and buyers were ferociously engaged in deals.

Yet in 2010, by all accounts a dismal year, Mr. Knakal claims he did about $500 million of transactions, a respectable tally that actually earned him more commission dollars than 2007 because the dearth of smaller deals he was doing that year actually earned him a higher commission rate.

“I’m pretty confident that 2012 is going to be my biggest year ever,” Mr. Knakal said. “It’s already proving to be true so far.”

While Massey Knakal specializes in smaller transactions, Mr. Knakal has differentiated himself from that formula by brokering larger deals than the firm usually handles.

Last year, he sold two buildings on 29th Street and Broadway to the hotel developer Jon Lam for over $70 million. In recent weeks he handled the sale of three portfolios of apartment building, for roughly $40, $50 and $60 million respectively. He also just completed the sale of a development parcel in Williamsburg for more than $20 million to an investment group led by the prominent New York owner Joe Chetrit.

He sold a $7 million building in Brooklyn for the Jehovah’s Witnesses, an organization that owns more than a billion dollars of real estate in the borough and is in the process now of liquidating its holdings. The group is a cloistered religion, yet Mr. Knakal has become a trusted broker for the valuation services he has performed for the organization through the years. The pace of deals shows no sign of letting up. Mr. Knakal is in the process of marketing an industrial building in the Bronx that he thinks will trade above $40 million. He’s also in the process of negotiating to add parcels onto hotelier Jon Lam’s Broadway development site.

Mr. Knakal chalks up a big portion of his success to Massey Knakal’s territory system. Brokers at the firm are assigned certain submarkets in the city where they are encouraged to become specialists. According to Mr. Knakal, it is the best way to do deals because, in a city where pricing can vary dramatically by neighborhood, it allows a broker to develop the knowledge and focus to better source and execute deals. Criticism has also been lobbed at the approach. Some rivals say that it hems brokers into a narrow geography.

Mr. Knakal’s own business is a counterpoint to that claim. His home turf is in Midtown, but he often handles sales outside of that boundary, partnering with whichever broker at the firm works in the territory a deals takes him. In this way, Mr. Knakal is beyond just a public face to the firm, but also an originator of business for more than just he and his own team.

“I look at the model and credit it for a lot of my success,” said Mr. Knakal, who acknowledged that while he knows much of Manhattan, he’s not as well versed in other boroughs like Queens and the Bronx. As such, he benefits from having the specialists in those markets as his partners.

Nonetheless, a large part of what continues to drive Mr. Knakal, who will turn 50 in May, is his love for the business, regardless of the borough.

“I still get pumped up when a client hires me,” said Mr. Knakal. “It doesn’t matter if it’s for a small property in the Bronx—I get excited about it.”

Dgeiger.com

It’s not clear what Mr. Chetrit has negotiated to pay in the deal, but the property was being marketed by a Massey Knakal team led by the company’s chairman, Robert Knakal, that sources said was aiming to net a purchase price in the high $20 millions.

77 Commercial Street. (Courtesy Property Shark)

The property features about 230 feet of frontage along the water with unobstructed views of Manhattan.

A commercial broker who has done deals in Williamsburg and Greenpoint said that Mr. Chetrit, who owns a number of properties in Manhattan, has been a voracious buyer in northern Brooklyn.

“It’s well known that if you have a parcel for sale that Mr. Chetrit is a go-to,” the person said, who didn’t want to be quoted in case he has future deals to show Mr. Chetrit.

It was reported in recent days that Mr. Chetrit, in partnership with the boutique hotel chain King & Grove, were in contract to buy the Hotel Williamsburg.

Neither Mr. Chetrit nor Mr. Knakal could be reached for comment.

Dgeiger@Observer.com

 640 Broadway has sold for $32.5 million.

According to Bob Knakal, chairman of the brokerage company Massey Knakal who handled the sale with colleague James Nelson, the roughly 63,000 square foot Soho building was purchased by a first time Manhattan buyer in partnership with an institutional investor. Mr. Knakal, a prolific broker of commercial and multifamily buildings in the city, said he could not disclose the identity of the joint venture because they were his clients and asked him to remain anonymous.

The seller in the deal, an entity called 640 Realty LLC that Mr. Knakal said also did not want to be revealed, purchased the building in 2004 according to New York City property records for around $13 million. The company, whose president is listed as Arnold Simon in mortgage documents, sold the property for more than double what it paid.

“They created tremendous value by doing quality renovations to the vacant units when they came available,” Mr. Knakal said.

But part of the appreciation was based on the building’s remaining untapped potential Mr. Knakal explained.

640 Broadway has 12 retail stores and 21 residential rental units, nine of which are rent stabilized. As those units roll over to market rate, Mr. Knakal said the building could be converted into condos. He also said that a large apartment could be created at the top of the building by joining some of the units, a space whose value would be enhanced because it is exclusively serviced by a private elevator in the building's little-used Crosby Street entrance.

“It could be massive apartment with outdoor space,” Mr. Knakal said.

Mr. Knakal also revealed that the building has a large vaulted basement and sub-cellar level that has a footprint larger than the ground level and upper portions of the property.

“The building is 25 feet by 200 feet but the the vaulted basement is probably 35 feet by 300 feet, it goes under the sidewalk,” Mr. Knakal said. “We thought it would make an awesome private club, or something like that. You could take the floor out between the basement and celler and create a space with 15 to 20 foot ceilings. There is real potential there.”

 Dgeiger@Observer.com

Aliza Avital.

Mr. Lieberman, who joined Eastern Consolidated in 2009, was bestowed the firm’s “Rising Star” merit last year, in part for his representation of the U.S. Bankruptcy Court in its $20.1 million sale, at auction, of 114 West 86th Street, the sought-after prewar apartment asset featuring a stalking horse bid from Bernstein Real Estate.

Originally hailing from Israel, Ms. Avital, meanwhile, served in the Israeli army and speaks fluent Hebrew. A member of the Real Estate Board of New York, the 34-year-old broker has arranged more than 25 deals valued in excess of $650 million since she joined Eastern Consolidated in 2003. As a senior director, she will continue to focus on investor clients that include institutional and private buyers and sellers.

“Aliza and Lipa have distinguished themselves respectively during the past few years by having successfully closed several complex transactions in a recessionary real estate marketplace,” said Ms. Paris. “Both possess the drive, dedication and work ethic necessary to rapidly advance their careers, and we are pleased to recognize their achievements with these promotions.”

­­­­­­**

Lipa Lieberman.

Cassidy Turley, the commercial real estate services provider with more than 60 offices nationwide, has hired Bruce Weinberg as an executive managing director.

Mr. Weinberg, a 25-year brokerage veteran who served as first vice president at CBRE and in a similar leadership position at the Ginsberg Organization, will be based out of Cassidy Turley’s New York office, where he will act as a tenant and agency rep. In his career, Mr. Weinberg has represented Mitsui & Company, Brooks Brothers and Bergdorf Goodman, as well as the owners of 380 Madison Avenue, 335 Madison Avenue and 192 Lexington Avenue, among other agency assignments.

“Bruce Weinberg is an exceptional addition to our New York brokerage services team,” said Peter Hennessy, the New York tristate regional president for Cassidy Turley. “As part of our strategic growth plan, Cassidy Turley continues to expand its talent-recruitment efforts of notable leadership, and Mr. Weinberg brings impressive New York market knowledge and strong business acumen to our firm.”

­­­­­­**

Bruce Weinberg.

Brown Rudnick, an AMLaw 200 law firm with offices in the United State and Europe, has tapped attorney Mark Fawer to expand its real estate practice in New York City.

Mr. Fawer, the former deputy practice leader in Dickstein Shapiro’s corporate and finance group, will employ his wide range of legal experiences to better compete in the city’s real estate distressed market.

Previously, he has represented real estate developers, funds, real estate investment trusts and investors. He is also versed in financing, recapitalization, single-asset and portfolio sales and originations.

“Mark brings a marquee stable of funds clients to our real estate practice, which will integrate well with our firm’s focus,” said chief executive Joseph Ryan.

“A large and growing portion of Mark’s practice is working with nonbank lenders and others to both resolve their distressed legacy real estate and CMBS assets as well as to take advantage of distressed real estate investment opportunities, all of which will help us better position the firm to successfully compete in the real estate distressed market,” added Mr. Ryan. ”We welcome Mark to the firm.”

­­­­­­**

Massey Knakal Realty Services has hired Justin Boruchov as a director of the firm’s capital services division, it was announced last week.

Mr. Boruchov, who comes to Massey Knakal with a financial industry background, most recently worked at Guardhill Financial Corp., where he began as a mortgage banking analyst and assistant to the firm’s chief executive before being promoted to vice president and loan originator at the company. During his six years at the firm, he managed more than $90 million annually in commercial and residential. In his new role, Mr. Boruchov will tap Massey Knakal’s connections with lenders to procure financing in the commercial real estate debt markets for assets throughout the New York metropolitan area. He will focus on the Upper West Side.

­­­­­­**

Robert Rizzi.

Holliday Fenoglio Fowler, a commercial real estate and capital markets services provider that operates 20 offices across the country and that is more commonly known as HFF, has hired Robert Rizzi as a managing director at its New York office, it was announced last week.

Mr. Rizzi, who most recently served as a managing partner at Broad Street Advisors, will now focus on equity and joint venture capital as well as investment sales transactions throughout the New York metropolitan area. At Broad Street, which he cofounded in 2000, Mr. Rizzi closed more than $4 billion in sales transactions.

“Rob has a diverse background executing a wide range of investment sales, debt and equity transactions, not only in the New York metropolitan area but on a nationwide basis, and we are looking forward to having him as a member of the team,” said Michael Tepedino, a senior managing director at HFF.

­­­­­­**

Cassidy Turley has hired Jones Lang LaSalle’s Theodora Livadiotis as an associate vice president in the real estate services firm’s New York office.

Ms. Livadiotis, who had also worked as a client relationship manager and valuer at Foxtons in the United Kingdom, will work in Cassidy Turley’s Brokerage Division. There, she will be focused in tenant representation and new business development, especially in cultivating new opportunities in the midtown south submarket, the firm said.

“Theodora Livadiotis is an impressive addition to our New York brokerage services team,” said Peter Hennessy, New York Tri-State region president of Cassidy & Turley. “Given her international experience with Foxtons, Inc., and her expertise in tenant representation and negotiation, we’re thrilled to add this young talent to our growing team of New York market experts,” he added.

Ms. Livadiotis had most recently served as an associate in Jones Lang LaSalle’s New York Brokerage group.

During her time at Foxtons, Ms. Livadiotis managed and trained a team of fifteen negotiations servicing more than 70 clients. She also ranked first in the company on a 12-month average out of 118 negotiators in 2007, according to a release.

jsederstrom@observer.com

The Plan 2758 Broadway

5:45 The 116th annual REBNY banquet is just getting started at the New York Hilton. Chicago Title is having an invitation-only party on the building’s second floor.

5:46 As usual, the night’s official festivities begin with a cocktail party in the room adjacent to the Hilton’s main ballroom, where the dinner is held. Jason Muss, a principal at Muss Development, stands near the entrance to the room with Jared Kushner (owner of The Commercial Observer), Jared’s wife, Ivanka, and Fried Frank chief Jon Mechanic. “I love this party. It’s a great place to catch up with people,” Mr. Muss says.

5:50 The cocktail reception is quickly filling up. Simon Ziff, a principal at the financing company Ackman Ziff, stands near the open bar with his wife. “It’s overwhelming,” Mr. Ziff says. “Think of all the people here. A few seconds to say hi to each. That’s a lot of seconds.”

6:00  Hal Fetner, a developer who is building two prominent residential buildings with partner the Durst Organization, steps over to the bar. “The feeling in the room is always tied to the health of the market,” he says. So what’s the vibe? “Ask me later. It’s too early to tell. But I think things are good.”

6:01 John Santora, an executive at the real estate services firm who recently helped negotiate an agreement between landlords and the union that represents building employees, 32BJ, is chatting with C&W appraisal expert Brian Corcoran. “A lot of people worked on that deal,” Mr. Santora says of the negotiations. “I can’t take the credit for it.”

Steve Spinola, REBNY’s president, greets guests in the main room of the cocktail space. “We had to put a few tables upstairs,” Mr. Spinola says, indicating that attendance at the banquet has picked up from last year. “We got a lot of last-minute calls from people who wanted to come.”

6:17  Alan Weiner, the group head of Wells Fargo Multifamily Capital, one of the biggest lenders in the city, is chatting busily with Rob Speyer, one of the chief executives of the real estate firm Tishman Speyer.

Eric Deutsch, the former head of the Downtown Alliance who now is an executive at Montparnasse 56, a builder of observation decks, surveys the crowd. “My first job out of college in the early 1990s was with REBNY,” he says. “The market was terrible then and they barely had anyone at the banquet. They made me sit up front during the dinner to make it seem like people were here.”

6:30  Congresswoman Carolyn Maloney strides in. “I just secured us $300 million, a high-speed-rail grant to develop a line between Boston and New York. It’s very exciting,” she says, taking a crab leg. After she’s done with the morsel of meat, she holds the shell and looks for the waiter. “Where do I put this thing?”

6:32 The room’s cocktail banquet is about 75 percent full.

6:45 Robert Lapidus, an executive at the real estate investment company L&L Holding Company, becomes enraged when The Commercial Observer asks him if he is bidding on a leasehold interest in the Flatiron office building 114 Fifth Avenue, as is rumored. “We’re not here to talk about fucking business!” he yells, grabbing The CO’s notepad and tossing it.

Gary Green, head of the building services company Alliance, briskly and very politely retrieves the notebook while Mr. Lapidus hurls epithets at The CO. Acting like a true gentleman—and also looking the part in a finely cut tuxedo—Mr. Green apologizes for his friend. “You can’t do that! Knucklehead!” The CO overhears him say to Mr. Lapidus.

6:46  Kenneth Fisher, a partner at the real estate investment company Fisher Brothers, tells The CO that this is the first REBNY banquet he has been to in five years. “Every time this year, I’ve been playing golf in the desert [at the Bob Hope Classic].”7:00

Jeff Roseman, a retail leasing executive at Newmark Knight Frank, squeezes through the crowd. “It’s a great place to see old friends.” He greets Steve Green, the founder of the city’s biggest landlord, the REIT SL Green.

7:05 “This is my childhood,” Helena Durst, looking elegant in a flowing dress, says of the banquet. “Do you like Christmas? Do you like Sunday dinner? That’s what this is for me. I have so many memories of coming to this party.”

7:09 Deputy Mayor Robert Steel and Councilwoman Jessica Lapin walk through the room together, busy in conversation.

7:15 Guests are being pushed out of the cocktail reception into the main dining room. The dinner is about to begin.

7:16 “Do I like this party? It’s OK,” Kathryn Wylde, head of the Partnership for New York City, says. “I go to a lot of parties.”

7:25 The CO bumps into Woody Heller in the men’s room and mentions to him a rumor that Will Silverman, Mr. Heller’s colleague at Studley, doesn’t sit at a desk but stands. “It’s true,” Mr. Heller says. “He has a swivel desk that can be lifted and he stands at it rather than sits. He says it’s more comfortable.”

Does Mr. Heller do the same thing? “I pace,” Mr. Heller says.

7:40 The crowd, now dense, is heading into the main ballroom.

7:41 Bruce Mosler, a top leasing executive at Cushman & Wakefield, chats with friends outside the ballroom. “A lot of my good friends are in real estate, so this is a fun night for me, I get to see them all,” Mr. Mosler says.

7:42 Paul Pariser, a chief executive of the real estate investment company Taconic, stands nearby. Known as an avid skier, The CO asks him if he’s been to Colorado yet this season. “There’s no snow!” Mr. Pariser replies.

7:50 Howard Michaels, of the financing firm Carlton, is making his way into the ballroom. “If you’re in the real estate business and you’re not at this party, you have to have your head examined,” Mr. Michaels says. “Want to know something? I almost didn’t come. That was the pep talk I gave myself.”

8:00 Already murmurs are going around about where the after-parties are going to be. “I’m not going to an after-party,” says Bob Knakal, chairman of the brokerage firm Massey Knakal, which during the boom years threw epic REBNY parties. “I have dinner plans with my wife.”

8:05 Steve Berliner, an executive at the brokerage company Studley, flashes The CO a stack of his business cards, which he plans to hand out. “Tonight is the best recruiting night of the year,” he says. “I started getting recruited to Studley six years ago at this party.”

8:20 The CO tells Amira Yunis, a retail leasing executive at CBRE, that she looks stunning in her black dress. It’s true, the former model does. Asked what her plans for the year are, she jokingly grabs The CO by the shoulders and shakes, “Make millions and millions and millions of dollars!”

9:00 The ballroom is full. But few people are eating. In the center of the room, Mitch Arkin, an executive at C&W, is chatting. “I haven’t eaten yet,” Mr. Arkin says. “I’m not going to eat.” What is he using for fuel, a hungry CO asks. “Adrenaline.”

9:10 “After-party is at Nobu,” Matt Astrachan, an executive at Jones Lang LaSalle, tells his colleague Mitch Konsker and C&W retail executive Brad Mendelson. “JLL party at 10!” Mr. Mendelson booms.

9:15 Dessert is being served. Some kind of chocolate-coated-ball concoction. The CO is still looking for dinner, finds a steak and eats it. It’s not as rubbery as rumored, though it’s certainly overdone.

9:45  Steve Durels, SL Green leasing chief, and Paul Glickman, an agency leasing specialist at JLL, walk out chatting. The banquet is winding down.

10:00 Kent Swig, with a closely cropped beard and carrying a few extra pounds, makes his way out. “I’m having a beer,” he says.

dgeiger@observer.com

“We’re going to see a natural regression in 2012 back to the norms,” said Robert Knakal, Massey Knakal's chairman, noting that the volume of properties sold in the city has been below the historical average since the recession and is likely to bounce back. “The potential increase in capital gains that could take place in 2013 [is a big driver]. We saw a significant spike in sales volume in 2010 for the very same reason.”

Robert Knakal, back in the day.

Mr. Knakal predicted that development parcels in the city would be among the best appreciating assets during the year, anticipating they could rise by 20-30 percent in value due a dearth of both residential and commercial development in the city in recent years.

“There has been such a low supply of new product put on the market,” Mr. Knakal said. “Developers anticipate the market two to three years in advance and most are feeling optimistic about the end user demand in that time frame.”

Paul Massey, who with Mr. Knakal co-founded the brokerage company also highlighted the popularity of development sites.

“We were creating thousands of luxury residential units per year but that production ceased three and a half years ago,” said Mr. Massey, who together with Mr. Knakal and other company executives, delivered their comments during a meeting yesterday morning with the media to present their outlook and year end market statistics for 2011.

Massey Knakal compiled a host of encouraging data that shows the sales market in the city is bouncing back since falling precipitously during the economic downturn. Citywide, $25.6 billion of property was sold in 2011, an 80 percent increase from 2010, and 2,122 properties changed hands, a 25 percent increase in volume year over year.
Still the numbers pale in comparison to the boom years. In 2006, $44.5 billion of deals were done and 2007, the most prolific year on record for New York City’s sales market, $62.19 billion of deals were completed, according to Massey Knakal figures. Mr. Knakal didn’t think that dollar volume would swell in 2012 to that level but predicted the market could see between $41 to $45 billion of sales activity.

Pricing on average per square foot appreciated by 6.1 percent across property types in 2011 the company said. While that figure was lower than the wild uptick in value that occurred as the market skyrocketed during the boom years of 2005 to 2007, Mr. Knakal said that the appreciation level was compelling compared to other investment classes. “I think our expectations are skewed by the fact that during the boom years there were huge gains and when the market fell there were big losses, the scale of expectations has been kind of exaggerated,” Mr. Knakal said. “But six percent is very solid. Warren Buffett always says that ten percent returns are outstanding. I think that in a market where treasuries are low, six percent returns on real estate make it a desirable asset class.” Mr. Knakal predicted that prices could outpace 2011’s increase, rising by as much as eight percent on average per square foot in 2012.

James Nelson, an executive at Massey Knakal who participated in the company’s presentation supported Mr. Knakal’s point that real estate was attractive to buyers because it offered compelling returns and stability during a period of continued economic uncertainty.

“Real estate benefits from the trend of investors wanting hard assets,” Mr. Nelson said. “People want something they can touch. Besides gold, real estate is one of the few hard assets and it cash flows.”

DGeiger@Observer.com

Robert Knakal.

It’s true that the dollar has strengthened. If we compare the dollar to the euro, we see that in August the euro was at 1.45 to the dollar and, last Friday, the euro dropped to 1.27 as the economic problems in Europe impact the currency balance. If we believe what many people in the industry claim, that the weak dollar is an incentive for foreign buyers to purchase properties here, this shift should exert negative pressure on the flow of overseas capital into our market.

I’m always left scratching my head when I hear people say the weak dollar stimulates foreign investment in the U.S. The fact is, when the dollar is weak, the incentive for offshore buyers to invest here is also correlatively weak. Think about the dynamic at work. If foreign investors buy a property here because the dollar is weak, they’ll receive their income in the same weak dollar. And if they sell the property (even at a big profit), they’ll receive the sale proceeds in that same weak dollar. Without fluctuations in the relative strength of each currency, investors are no better off from having invested in the land of the weak dollar.

In fact, foreign investors would benefit from an investment here only if their home currency failed to strengthen at the same pace as the dollar. Only if investors chose to play a currency arbitrage trade (while also investing in real estate) could they hope to receive a benefit specifically caused by the weak dollar. While some investors might take this into consideration, the vast majority of foreign commercial real estate investors do not.

This theory is also supported by the fact that we haven’t seen a long-term correlation between the strength of the dollar and the appetite from cross-border investors for properties here. And if that correlation existed, it would be reflected in the New York City sales data, as the Big Apple is the most sought-after destination for this foreign capital.

Consistent demand from foreign investors has been apparent since the 1980s, particularly south of 96th Street. We estimate that, each year, about 10 to 15 percent of the properties here are purchased directly by investors outside of America. What’s more difficult to determine is the extent to which foreign capital is serving as equity financing for local investors. Many foreign institutions have poured billions of dollars into New York City, particularly in the multifamily market through operators with established portfolios who get a tremendous boost from the capital provided by these foreign, indirect, capital sources.

Recently, we’ve seen foreign, high-net-worth individuals looking to purchase properties on a direct basis in New York. We believe this has been caused by the economic turmoil being experienced across the globe and the relative safety of investing here. As dysfunctional as we believe our political system is, and as sluggish as our economic recovery has been, the U.S. remains relatively stable, and that stability is viewed as a safe haven for foreign capital.

In the meantime, my company is working with real estate investors from 28 countries across the globe, and they’re all interested in purchasing income-producing properties in Manhattan. And regardless of whether they’re trading pesos, pounds, kronas, rands or yens, what each of them wants most is capital preservation—no matter how strong the dollar is.

rknakal@masseyknakal.com

Robert Knakal is the chairman and founding partner of Massey Knakal Realty Services and in his career has brokered the sale of more than 1,175 properties, having a market value in excess of $7.8 billion.

The school will be relocating from its current space at 280 Broadway, said David Falk, president of Newmark Knight Frank who represented Pace in the deal.
 

140 William Street (photo courtesy of Property Shark)

Daniel Geiger, Staff Writer, is reachable at DGeiger@Observer.com and can also be followed at Twitter.com/DanGeiger79.