Developers Buy Less, Pay More in 2016

Real estate developers continued paying top dollar for Manhattan land on which to build in 2016. This, despite the fact that the 421-a property tax break expired, the condominium market weakened and banks were less willing to lend.

The average price developers paid per buildable square foot for development sites rose 5% to $640, according to Ariel Properties. However, the number of properties, transactions, and total dollars spent on development fell, compared to 2015.

“Foreign investors continued to drive the development market last year,” said Andre Sigourney, director in the Investment Sales Division of Ariel Property Advisors.

One representative example of foreign investment was China Oceanwide Holding’s $390 million buy of 820,000 buildable square feet at 80 South St. and 163 Front St., which was the largest development transaction of 2016.

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