This year looks like it will be another banner year for investment sales of commercial real estate. Investors prefer real estate over the stock market, which is down close to 4% since the end of the year. Even though it is only January 27, a number of major transactions have been announced. Last week, a partnership of Serge Hoyda, Yair Levy, and one of Lower Manhattan’s most active investors, Kent Swig – principal of Swig Burris Equities and co-chairman of Terra Holdings, the parent company of Brown Harris Stevens – agreed to purchase from Rose Associates the 28-year-old, 50-story, 845-unit market rate rental building called The Sheffield at 322 W. 57th St.

They are paying about $418 million, or $494,765 per unit, for the building, which also includes six floors of office space. They plan to convert the apartments into condominiums. According to industry insiders, the development team of Hoyda, Levy, and Swig are also close to purchasing a site on Amsterdam Avenue on the Upper West Side, with plans for a residential condominium.

Mr. Hoyda and Mr. Levy are the owners of a development site on the west side of Third Avenue between East 23rd and East 24th streets. The New York Sun has learned that they are under contract to sell the site to one of Manhattan’s most active developers of residential condominiums.

The sales price is in the range of $82 million, or about $300 a developable square foot.

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Investors continue to be interested in acquiring office buildings to convert into residential condominiums in Manhattan and Brooklyn. The 31-story, 380,000-square-foot former headquarters of the Williamsburgh Savings Bank, at One Hanson Place in Downtown Brooklyn, is expected to be sold this April. According to industry insiders, the owner of the property, HSBC Bank, is selling the landmark building to the Dermot Organization. The price is in the range of $76 million to $90 million, or at least $200 a square foot.

Earlier this month a partnership of the Chetrit Brothers and Joseph Moinian entered a contract to purchase the 670,592-square-foot, 15-story International Toy Center at 200 Fifth Ave. and its companion site, the 16-story, 337,000-square-foot building at 1107 Broadway. The purchase price is about $360 million, or $350 a square foot. The purchaser plans to relocate tenants into one building and convert one of the towers into residential condominiums.

The executive director of the capital markets group at Cushman & Wakefield, Scott Latham, said, “Institutional investors are increasing allocations to real estate and will account for a greater share of the sales in 2005. The combination of the abundant supply of debt and equity and low interest-rate financing will make 2005 a record year for sales.”

Mr. Latham said he expects “an increasing number of real estate investors to bifurcate retail components of a property in an attempt to achieve premium price.” This was the model last August, when the Merrill Lynch Financial Center at 717 Fifth Ave. was split and sold as two condominiums. Equity Office Properties Trust purchased the 380,796-square-foot office component of the tower for $160.5 million, or $422 a square foot. The balance of the building, consisting of the retail component of about 84,000 square feet, was sold to a partnership of the Feil Organization, Lloyd Goldman, and Stanley Chera. They paid $192.5 million, or $2,292 a square foot.

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Last year, it was reported that the Pritzker family, the owners of the Hyatt Hotel chain, and the estate of Sol Goldman, the owner of the land under the Stanhope Park Hyatt Hotel on Fifth Avenue and East 81st Street, were planning to convert the property into a residential condominium or cooperative. Earlier this month, a partnership including Gary Barnett’s Intell Investment Management paid about $79 million, or $425,000 a room, for the 185-room hotel, which closed on January 15. Mr. Barnett plans to convert the hotel into luxury cooperative residences. Earlier this month, Mr. Barnett’s company purchased The Encore, a 260-unit residential tower with ground-floor retail located at 301 W. 53rd St. on Eighth Avenue. He paid about $130 million, or $500,000 a unit, to Ruby Schron’s Cammerby’s International. The property is projected to be converted into condominiums.

I expect a number of hotels to be offered for sale for possible conversion to condominiums. These properties include the Sutton Hotel at 330 E. 56th St. and The Mark at 25 E. 77th St., as well as a few suite hotels located in Midtown and the Upper East Side.

In the early 1990s, Ireland’s Power Corp. purchased the land marked five story, 28,000-square-foot Rhinelander Mansion at 867 Madison Ave. for about $32 million. In 1997, the German fund operator TMW purchased the property for $36 million, or $1,300 a square foot. Last November, TMW announced plans to purchase the 365,000-square-foot office tower at 1180 Avenue of the Americas for $149 million, or $408 a square foot. Now, the major investment sales brokers are competing to be retained by TMV as its agent to sell the Mansion, which serves as the flagship store for Polo Ralph Lauren. The property is expected to fetch a price of $2,500 a square foot, or $70 million.

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Robert Knakal, the chairman of Massey Knakal Realty Services, told me that “condominium conversions will continue to fuel the increases in the price on the market” for rental properties and developable land. Properties in the outer boroughs will increase in price at a faster rate than those in Manhattan. As buyers get priced out of Manhattan, demand will grow in the outer boroughs significantly, he said.

Recently, Massey Knakal sold a development site at 214 Richardson Ave. in the Williamsburg section of Brooklyn to a developer who plans to build a residential condominium for a price of $76 a developable foot.

The director of Eastern Consolidated Properties, Alan Miller, agrees with Mr. Knakal, saying that land prices for developable land in Long Island City are now exceeding $100 a foot. “Eighteen months ago, a development site on Purges Street and Jackson Avenue was sold for $30.Today, similar sites within a few blocks of the site are selling for $100.”

The Sun has learned that a residential development site on Pearson Avenue in Long Island City that sold in July 2004 for $9.2 million is expected to be sold for $16 million, or $110 a developable foot.

In the spring a development site on West End Avenue between West 59th and West 60th streets will be sold to a major real estate investment fund for about $65 million, or $250 a developable foot. The site has about 265,000 developable square feet, allowing construction of about 275 condominiums with a projected selling price of $1,000 a square foot. This site had been acquired in February 2004 for about $110 a developable foot.

In December 2003, John A. Buck II and John O’Donnell secured bond financing from the New York City Housing Development Corporation for the purchase of a 196-unit residential apartment building on East 92nd Street and First Avenue. The financing came through the 80/20 program, which enables a building owner to keep 20% of the units for low-income tenants and the other 80% as market rate rentals. Early this spring, the 190,000-square-foot residential tower is expected to be sold to a major investment bank for about $95 million, or $500 a square foot.

Another active investor, Jack Forgash, said, “Everyone wants a piece of Manhattan Island, and there is a limited amount of product to go around.”

In March, a partnership led by Mr. Forgash will close on the acquisition of the 184,000-square-foot, 11-story office building at 485 Fifth Ave. The partnership will be paying $54 million, or $293 a square foot to clothing maker Tommy Hilfiger, who will vacate the building.

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Earlier this month, Massey Knakal sold an eight-story commercial office building at 373 Fifth Ave. for $9.5 million, or $499 a square foot, to a Queens hotel developer. The new owner plans to renovate the building as a boutique hotel.

The Sun has learned that the Verizon garage building on West 42nd Street, between and 11th and 12th avenues, was purchased last week by a prominent developer of residential apartment buildings on Eighth Avenue in the Times Square neighborhood. According to industry sources, the property’s selling price was in excess of $125 million. The property is adjacent to a site owned by Jules Demchek, who is planning to build residential condominiums. These sites are directly adjacent to the Silverstein Properties-owned One River Place, a residential rental apartment building.

I expect that, in the spring, Norman Sturner’s Murray Hill Properties will find a buyer for the 11-story, 387,000-square-foot office tower at 417 Fifth Ave. Murray Hill is actively marketing the 49-story, 430,000-square-foot building at 30 Broad St. and the 13-story, 155,000-square-foot building at 83 Maiden Lane.

The real estate market in New York City today reminds me of the stock market in the late 1990s. Prices continue to soar, as investors continue to play a form of the game Monopoly in purchasing and then subsequently reselling properties. My big question is if, and when, the bubble is going to burst. The third and fourth generation of real estate owners have long-term memories. Unfortunately, I have to disagree with one of Manhattan’s leading owners of commercial office buildings, who told me, “The only thing that goes up and comes down is an airplane.” Time will tell if these prices can continue to maintain their momentum.

Mr. Stoler is a television broadcaster and vice president at First American Title Insurance Company of New York. He can be reached at mstoler@nysun.com.