The song “Celebration” by Kool & the Gang is played frequently at weddings and parties, as well as at the conclusion of many important sporting events. In addition, it could be the national anthem of New York City’s real estate industry.

The song certainly would be an appropriate accompaniment to an examination of commercial real estate sales volume. Preliminary estimates indicate that commercial sales in the city this year soared 140% above 2005’s record, to as much as $31 billion.

“The sales volume is probably closer to $45 billion to $50 billion, when you consider the purchase and privatization of the publicly held real estate investment trusts assets,” the president of Cushman & Wakefield, Bruce Mosler, said.

It was “a great year for the investment sales business, although it really was a tale of two markets,” the chairman of Massey Knakal Realty Services, Robert Knakal, said. “One encompassed the first half of the year, and the other was the second half. During the first half, the sales activity, in terms of number of buildings sold, experienced among the highest turnover levels recorded within the last 20 years, running at about 3.9% annually.

“While the numbers are not yet complete, I am confident the second half of 2006 will show a significant reduction in the number of sales closed,” he said. “Many people will quote the $30 billion of sales and compare it to the much lower number recorded in 2005, but this is misleading. Mega sales in 2006 are skewing the numbers upward. We are much more focused on the number of sales, which we think is much more indicative of market activity, viability, and strength.”

Fueling the increase in sales of commercial properties is the rise in office rents and the low vacancy rates.”Rents for class-A office space in Midtown is $65.63 per square foot, with a vacancy factor of 6.2%,” the executive director of Cushman & Wakefield, Glenn Markman, said. “The market has not been this tight since the second quarter of 2001. For the first time in five and a half years, the overall vacancy rate in Manhattan is below 7%.

“On average, close to half a million square feet of available space has been removed from the inventory since the beginning of 2006,” he said. “You can count on one hand the amount of large blocks of space in excess of 200,000 square feet available for occupancy.”

“The big story for 2006,” the chairman of Newmark Knight Frank, Jeffrey Gural, said, “is the fact that for the first time rents are rising significantly, where in the past only the price of the building was rising.”

The president of Dividend Capital Realty Trust, Marc Warren, adds: “Real estate is basically an accepted institutional asset class and notwithstanding asset class and notwithstanding high market pricing, it is the ‘least bad’ investment to many large capital sources.”

Some real estate leaders have different opinions on the investment sales outlook. “Most of the major purchases made this year are by buyers who are chasing the dough in the market and ‘potential’ market explosion from a rent standpoint,” a principal at Stellar Management, Robert Rosania, said. “These are momentum plays, as opposed to genuinely increasing the real estate values.”

One of the most active purchasers this year is the Witkoff Organization. The company recently bought the 675,000-square-foot office component at 1745 Broadway that serves as the world headquarters for Random House for $509 million, or $754 a square foot. The company also purchased a 116,000-square-foot office condominium at 420 Fifth Ave. for $58.5 million, or $505 a square foot.

The condo encompasses four floors of the 30-story, 609,000-square-foot building on West 37th and West 38th streets.

The seller was a partnership that includes the German company Bayerische Beamten Versicherungen, which acquired the condo in 1995 for $30 million. “These purchases were well-priced on the bricks, certainly as compared to some of the other purchases made this year,” the CEO of the Witkoff Organization, Steven Witkoff, said. “Properties in New York are hot and cheap. Last week, our company entered a contract for a property in London for $400 million that cost us $1,500 a foot, much more expensive than any building in New York.”

Immediately after the attacks of September 11, 2001, few investors had an interest in purchasing properties in Lower Manhattan. That’s changing: In fact, the highest price ever for a Lower Manhattan office building is expected to be fetched when Deutsche Bank sells and leasebacks on its 47-story, 1.65 million-square-foot building at 60 Wall St. Industry leaders expect the building to be sold for about $1.2 billion, or $750 a square foot.

Early next year, the Koeppel Companies are expected to close on the sale of its landmark Standard Oil building at 26 Broadway. Industry leaders expect the property to fetch more than $200 million. A local investor is expected to pay about $60 million for two office buildings that presently serve as schools at 90 and 100 Trinity Place. The adjacent properties have a total of 175,000 square feet and include about 75,000 feet in development rights.

As reported last month in The New York Sun, Silverstein Properties and California State Teachers Retirement System purchased the corporate headquarters of Moody’s Corp. at 99 Church St. The joint venture paid $170 million, or $505 a square foot, for the building. A number of industry leaders expect the joint venture to demolish the property and build a new office or residential tower on the site. The Sun has learned that a number of other properties on Trinity and Greenwich streets are expected to go to market early next year.

With rents rising all over Manhattan, real estate investors are betting that rents will exceed $60 to $70 a square foot for classic office buildings at One Park Ave. and Two Park Ave. in the Murray Hill section of Midtown. Both of these properties are expected to be sold, and the purchaser believes that the rents will meet expectations to pay these record prices.

Last week, a joint venture of Murray Hill Properties and Westbrook agreed to enter into a contract to pay about $550 million for the 20-story, 929,000-square-foot One Park Ave., built in 1925. The seller is a joint venture of SEB Immolnvest and SL Green. SEB paid $242 million for a 75% stake in the building a few years ago. According to the trade, the joint venture purchased the property to defer taxes on its windfall profit on the sale of 450 Lexington Ave.

Last month, Murray Hill and Westbrook purchased the Brill Building at 1619 Broadway, an 11-story, 162,000-square-foot office building built in 1931. They paid about $89 million, or $550 a square foot, to Alan Rose, AVR Realty Company. Last month, AVR agreed to pay $1.28 billion to Boston Properties for the long-term leasehold interest in the 1.1 million-square-foot 5 Times Square.

Earlier this month, a joint venture of Murray Hill Properties Fund III and Principal Real Estate Investors paid $177.5 million to purchase the 25-story, 400,000-square-foot office building at 1412 Broadway at the corner of Broadway and West 39th Street. The joint venture paid $177.5 million to the seller, a joint venture of Murray Hill Properties Fund I & II and local investors. The seller acquired the property in 2004 from a JER Partners Fund for $105 million.

Directly across the street from One Park Ave. is the 29-story, 855,000-square-foot 2 Park Ave. In October, a joint venture of L&L Holdings and General Electric Pension Trust paid $450 million, or $526 a square foot. The property was owned by SEB ImmoInvest, which acquired it in 2003 for $292 million. According to the trade, the building is in contract to be sold for approximately $570 million.

Over the years, organized labor has assembled and maintained headquarters in Manhattan real estate. Last month, the Amalgamated Bank of New York agreed to sell its headquarters at 15 Union Square to Brack Capital for about $80 million. As reported in the press, the Service Employees International Union Local 1199 has retained an investment banker to sell its headquarters at 310 W. 43rd St. and an adjacent site. Transport Workers Union Local 100 went into contract to sell its headquarters building at 80 West End Ave. for $60 million.

Last week, Vornado Realty Trust closed on the acquisition of the 538,000-square-foot office building at 350 Park Ave., between 51st and 52nd streets, for $542 million, or $1,007 a square foot.

In November, the REIT announced it had entered into in agreement to acquire for approximately $689 million the Manhattan Mall, a mixed-use property located on the entire Sixth Avenue block front between 32nd and 33rd streets in Manhattan. The property contains about 1 million square feet, including 812,000 square feet of office space and 164,000 square feet of retail. Included as part of the transaction are 250,000 square feet of additional air rights adjacent to the 1.4 million-square-foot Hotel Pennsylvania, owned by Vornado. Vornado controls more than 5 million square feet of office properties within the eight-block radius of the Manhattan Mall.

A number of properties have traded on Fifth Avenue during 2006. They have included 485, 521, 522, 535, 545, 597, the retail component of 717, 720 and the record price of $1.8 billion for 666 Fifth Avenue. Last month, Corporate Realty Income Fund I LP entered a contract to sell, the 23-story, 234,000 square foot, office building at 475 Fifth Avenue for approximately $160 million, or $619 per square foot. According to the trade, at least three other buildings on Fifth and Sixth avenues between 34th and 42nd streets are expected to be marketed for sale early next year.

Let’s all remember it’s time to celebrate 2006 and look forward to favorable outcome for 2007.

Mr. Stoler, a contributing editor to The New York Sun, is a television broadcaster, and senior principal at a real estate investment fund. He can be reached at mstoler@newyorkrealestatetv.com.