RECORD volume combined with record commercial sales prices based on solid and increasing office rents are making for a banner year in commercial real estate.

Richard Baxter, executive director of Cushman & Wakefield, said there will be almost $40 billion in Manhattan trades this year.

“There were many $1 billion plus sales with prices breaking $1,000 a foot,” Baxter noted, adding, “There is a tremendous amount of pressure from foreign buyers to own Midtown properties.” Part of that pressure is from increasing rental rates.

“We are seeing $100 plus dollar deals once a week,” said Kenneth Siegel, managing director of Jones Lang LaSalle.

But not all is rosy, since fallout from other cities’ problems have affected residential end user pricing.

Daren Hornig, managing partner of Shea Commercial, said, “Looking back, the world may have viewed that the condo craze was great while it lasted, but there are a lot of alternative investment opportunities.” Companies are evaluating their outside options (outside Manhattan, that is) noted Barry Gosin, Chairman of Newmark Knight Frank.

“There will be sticker shock,” he acknowledges at ever-increasing office rents.

Manhattan is still cheaper than other financial centers like London and Tokyo, so barring a major catastrophe, no-one expects rents to drop.

After the dot-com crash as well as after 9/11, rents still bounced back higher than they were prior to the incident.

A future knock, however, could come in the form of a two-point spike in interest rates. The Democratic sweep should also keep everyone on their toes.

“They will raise taxes and fees and increase oversight and it will not be good for anyone,” predicted Eric Anton, senior managing director of Eastern Consolidated Properties. “They will increase rules and regulations, and add them to programs like rent control and rent stabilization.” Still, chuckled Steven Siegel, chairman of worldwide brokerage for CB Richard Ellis, “A politician’s platform is often changed by reality.”

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Closed and under contract as of September 30 ($30.3 billion) (pie chart)

All other: 13% $3.8 billion

Land: 8% $2.5 billion

Class A office: 48% $14.7 billon

Multifamily: 13% $3.8 billion

Other office: 14% $4.2 billion

Redevelopment: 4% $1.3 billion

Source: Cushman & Wakefield’s NY Capital Markets Group