We’ve just sold Suite 605 at 1950 Abbott St. in the Camden Square Village West office condominium project for $327,500. While the sale represents only $180 per SF, it indicates a trend upward in Midtown/South End office pricing, particularly in this project.
The recession took a toll on small businesses, which in turn had a big impact on the health of many office condominium projects. Foreclosures and distressed sales kept pricing down. Add owners not paying their association dues, and you can see how a stable project can become fragile quickly.
The lack of volume in “market” transactions during the downturn, where a willing and able seller could match with a willing and able buyer, had an incredible impact on pricing. Appraisers have had a tough time finding comparable sales. And when that happens, we usually see a conservative approach to pricing. In fact, we’ve had several instances in the last two years where a seller and buyer came to terms on price, only to find out that a property didn’t appraise.
When a property doesn’t appraise, a buyer generally has two choices; come up with additional cash at closing to fill the gap between appraised value and the contracted purchase price, or ask the seller to reduce the sale price. It can kill a deal quickly.
We’re now seeing good volume in transactions, which allows for more data, benefitting both buyers and sellers. We’re also seeing true appreciation in pricing, some of which is fueled simply by a lack of inventory. It’s a welcome indicator of things to come.