The fuel behind New York’s record-setting real estate bonanza is the sizzling market for capital, and both buyers and lenders predict that cheap financing will be available for real estate investors into the foreseeable future. The availability of investment capital set fire to the real estate investment sales market last year, when transactions topped $30 billion. Considering the preliminary sales that are in contract for 2007, I would not be surprised to see the following advertisement: “For sale in New York City, office buildings, rental apartment complexes, hotels, and retail locations, priced from $100 million to $2 billion. Financing available for up to 100% of total purchase price, nonrecourse, interest only, and flexible terms.”
Real estate investors are confident capital will continue to flow into New York’s office market, where vacancy rates are dropping and rents are on the rise. One of the most active lenders in 2006 was Wachovia Securities. Last year, the bank was the leading lender in the $5.9 billion financing for Peter Cooper Village and Stuyvesant Town, the largest mortgage ever provided for a single property. “Capital is plenty; it also is now a freely tradable commodity,” a managing director at Wachovia Securities, Robert Verrone, said. “We only originate financing for what we can sell; so long as we can sell it, we will originate it.”