If I had possessed a crystal ball 12 months ago, could I have predicted the fantastic events that took place in the New York real estate marketplace?

One thing is certain: I never would have expected the office buildings at 280 Park Ave., 350 Park Ave., 5 Times Square, and 6 Times Square to sell for more than $1,000 a square foot.

Hotel rooms also were in great demand, with more than a dozen hotels being sold, including the Drake, the Mark, and the Beekman. Two such transactions, the sales of Mandarin Oriental at the Time Warner Center and the W Hotel at Union Square, brought in more than $1.1 million a room.

The residential marketplace was booming last year, and investors followed suit and purchased properties for rental and condominium conversion. In a July 2005 column I wrote for The New York Sun, I predicted that MetLife would market the residential rental complex at Peter Cooper Village and Stuyvesant Town, yet I never expected the complex to fetch a mere $5.4 billion, or approximately $480,700 an apartment. The real estate community was taken by surprise when an investor group headed by Maurice Mann went into contract to pay $425 million for the classic pre-war rental building on the Upper West Side, the Apthorp, for a record price of $2.6 million an apartment.

Few people expected the success in the leasing of office space in Lower Manhattan, especially at 7 World Trade Center, developed by Silverstein Properties. Location is all important for residential condominiums, yet few people expected the record-high sales prices at Zeckendorf Developers’ joint venture condominium at 15 Central Park West. None of the residential developers who I know expected that the 421-a tax program, which had long fueled residential condominium development in the city, would be modified by Mayor Bloomberg and the City Council.

Air rights have always been a popular commodity, yet they were never expected to fetch close to $500 a foot, which was the case on Park Avenue over Christ Church.

Owning office buildings on Fifth Avenue has always been an obsession, and at least seven buildings were sold there this year. Nevertheless, industry leaders were taken by surprise in December when the Kushner Cos. agreed to pay $1.8 billion for the mixed-use retail and office complex at 666 Fifth Ave.

People from all over the world want to own real estate in New York.

The managing partner of Stonehenge Partners, Ofer Yardeni calls real estate our national pastime. “Its is not baseball, basketball or football, it is real estate. People talk about ownership of real estate 24/7, when they are working, eating, sleeping, and having sex,” he said.

So after a record-setting year, what can we expect to happen to New York real estate in 2007? Instead of providing my humble predictions, I have contacted some of the city’s most prominent real estate professionals to provide their thoughts on the dynamic marketplace.

New York, New York is truly a wonderful town. As a principal at Murray Hill Properties, Norman Sturner, says: “New York City as a business center remains, ‘The City of Oz.'” Most of the stars are aligned for another fantastic year for real estate.

THE COMMERCIAL MARKET

It looks like the cost of renting an office in Manhattan will rise again in 2007. “I believe that the New York City market as a whole, especially in Midtown, is experiencing a fundamental repricing,” the president of Macklowe Properties, William Macklowe, said. “As a major money center city, New York has always been cheap relative to its peers, now it’s catching up.”

“My crystal ball is narrow, yet I predict that Manhattan office properties in 2007 will be a repeat of 2006, but more so,” Mr. Sturner said. “Owners that had not thought of selling will realize that this may be the opportunity to cash out of properties at the lowest capital gains tax rates in decades, and at the highest prices ever achieved in history.”

“As long as there is no sentiment shift, and or market upheaval in the capital markets, there will be higher price sales for properties this year than previously seen,” a principal at Stellar Management, Robert Rosania, said. “Values are very highly leveraged to the historically inexpensive and aggressive capital market, so a small change there could have exacerbated ramifications.”

The chairman of the real estate practice at Greenberg Traurig, Robert Ivanhoe, said: “A measured rise in prices, nothing like those over the last few years, is likely in 2007 to reflect the improving fundamentals in real estate, such as lower vacancy rates, increasing rental rates, and the like.

“A steady rise is more likely than a dramatic one in the current environment,” he said.

The president and CEO of Cushman & Wakefield, Bruce Mosler, said, “The high-end office rental market in Midtown keeps reaching higher, more leases were signed in 2006 at above $100 per square foot than in the history of the city — no doubt caused by strong demand for the best space in Midtown and an extremely low inventory of available supply. One thing’s for certain. With continued demand for office space in Midtown and downtown, from financial services and law firms, we expect more rental rate growth in the near term.”

The chairman of the real estate practice at the firm of Stroock & Stroock & Lavan, and a developer of residential properties, Leonard Boxer, said he expects 2007 to be quite interesting. “No black clouds on the horizon, but certainly a time to digest and reflect,” he said.

Yet Mr. Boxer is cautiously optimistic. “This is reminiscent of past cycles that unfortunately resulted in an upheaval of the real estate markets for a significant period, so the word is ‘caution,'” he said. “One should remember that those who forget their mistakes are bound to repeat them.”

The president of the City Investment Fund, Thomas Lydon Jr., is cautious about the sale of office buildings. He said, “This will be the year someone will be left without a seat in the musical chair game of flipping office buildings every six to nine months.”

THE RESIDENTIAL MARKET

The executive director and principal of Eastern Consolidated Properties, Alan Miller, said, “If the first couple of weeks of 2007 are any indication of where we are headed, for New York it portends to be as good as 2006, which was record shattering. It seems that everyone is looking for their next deal, and with really no increased inventory yet, it is still quite a seller’s market.”

“The pendulum has swung back a bit in the direction of rental housing, due to the cooling of the condo market,” Mr. Ivanhoe, of Greenberg Traurig, said. “Unfortunately, escalating land prices and construction costs have more than outweighed increases in residential rents, so that profitability is challenged.”

The regional manager at Fremont Investment & Loan, Patrick Crandall, said, “There is still significant demand for housing, and record Wall Street bonuses will only help the market. There does not seem to be any softness in the high end of the condo market. Any softness we see would be in the middle market, move-up sector where there is more unsold inventory. I expect sales velocity in all sectors will pick up in the next few months and that 2007 will be an excellent year for the city condominium market.”

Many residential developers fear the effects of the changes to the 421-a tax abatement program. The president of Gladstein Development, Jane Gladstein, said, “I think the most compelling discussion in residential real estate today is centered on 421-a. What does it mean for the valuation of new property, its impact on consumer prices, and consumer psychology? How will it impact the ‘how much down and how much per month’ perspective of the consumer?”

Mr. Rosania, of Stellar Management, said, “The changes in 421-a program will have far reaching and dramatic effects.”

Mr. Miller said: “The combination of ever increasing construction costs, the softening of the consumer condominium market, the changes in the 421-a program, developers will only be able to afford land at pricing that makes a project viable.”

“The change in the 421-a tax abatement program is going to encourage developers to get their foundations in the ground before the new provisions go into effect in 2008,” the president of Bellmarc Realty, Neil Binder, said. “The bottom line for the residential marketplace is that 2007 should have good activity but prices as a whole will remain rather stable, but I am concerned about 2008. In the future, condominium real estate taxes are going to be ridiculous. This is going to discourage new construction because the economics aren’t going to work.”

THE HOTEL MARKET

More than 30 new hotels are planned all over the city, with a concentration in Lower Manhattan. The senior broker at Besen Associates, Adelaide Polsinelli, says hotels “will be the darlings of 2007 with the increase expected in tourism.”

Yet Mr. Ivanhoe says “hospitality is always at the greatest risk for abrupt reversal of fortune giving the “one night lease inherent to hotels. Any changes in the overall economy or geopolitical events will have a significant and immediate impact, and that risk has not really been priced into the hotel market.”

A principal at Sonnenblick Goldman, Mark Gordon, said prices “will likely continue to increase assuming interest rates do not. As long as there is not much new supply for full service and luxury hotels, and interest rates remain low, value will continue to increase.”

Yet Mr. Rosania said he feels the hospitality industry is “too hot, and the first to fall when there is a correction.”

LOWER MANHATTAN

The office, residential, and retail market has caught fire in Lower Manhattan. “The perception has finally caught up with reality that downtown remains a very strong and competitive financial center and the marketplace understands that Lower Manhattan is attracting a diverse international tenant base,” the president of Rudin Management, William Rudin, said. “Now that people truly understand downtown’s strength as a true 24/7 work and live environment, it will only continue to get better.”

“The commercial market continues to be tight and interest rates do not appear headed upward anytime soon,” the president of Trinity Real Estate, Carl Weisbrod, said. “I expect to see commercial property selling for higher prices in 2007; residential property will be flat to slightly higher.”

The president of Silverstein Properties, Larry Silverstein, said, “Clearly with the advent of the new office space at the World Trade Center — and the Goldman Sachs site — is going to have a major beneficial impact on demand for retail space. The other dynamic that affects retail is residential development. Residential construction is moving forward aggressively in Lower Manhattan and that too is a boon for retail space requirement.”

Mr. Mosler of Cushman & Wakefield said, “The downtown office leasing market saw the most activity, lowest vacancies and highest rents before September 11th. Though pricing was once driving industries to look downtown, we’ve seen the disparity in rents between Midtown and downtown shrink significantly, especially when taking into account the newer class A product in Lower Manhattan.”

NONPROFITS

Over the past few years, nonprofits have taken advantage of selling a significant amount of real estate. This spring, Macklowe Properties will begin construction of a luxury residential condominium at the former site of the Anti-Defamation League at 860 U.N. Plaza. In April, the New York headquarters of American Cancer Society on 56th Street between Fifth and Sixth avenues will be sold.

“A number of not-for-profit organizations are now recognizing that having so much value locked up in a fixed asset does not optimally serve their mission, and where asset was acquired many years ago, the asset is no longer optimal even for the parts of the their mission which the assets does serve,” a partner at Gibson Dunn, Andrew Lance, said. “Many boards are wrestling with the inevitable conclusion that continuing to hold the asset is not prudent, while other boards are recognizing this situation as an opportunity to redefine and amply their mission by deploying the proceeds from the sale.”

THE MARKET FOR CAPITAL

Fueling the record sales is the amount of capital available. Mr. Sturner of Murray Hill Properties writes in an e-mail message: “The capital markets are awash in money from overseas economies that are flourishing from domestic pension funds that have reached the percentage limits of stock ownership because of the rise in values (stock prices); from lending institutions that must put huge balances to work; and from the newest form of property purchases, hedge funds.”

A FIVE-BOROUGH BOOM

Fueling the fire for new residential construction is the desire by baby boomers and eco-boomers to reside in every borough of the city. Mr. Lydon of The City Investment Fund says, “2007 will be the year that ‘location’ does matter in the condominium market.”

A great deal of development is planned for Flushing and in Coney Island, Red Hook, and the Gowanus. Later this year, Muss Development will begin construction of its 1 million square foot mixed-use retail and residential complex. “The great thing about New York is there is always another neighborhood waiting to be discovered, developed, improved, or made more livable,” the president of Newmark Knight Frank, James Kuhn, said. “Many of us were myopic for so long we almost missed it. Coney Island has a wonderful beach, a great new subway station, and will be community-enhanced with a revived entertainment environment.”

A number of investors, including the City Investment Fund, Taconic Investment Partners, and Thor Equities, are looking forward to development in Coney Island. Mr. Lydon said 2007 “will bring forward a clearer vision of the future of Coney Island, when New York City, through EDC and City Planning, start the formal ULURP process for the area around the Stillwell Avenue subway station and Key Span Park. City Investment, through its joint venture with Taconic Investments is working closely with the city to formalize a master plan on the five acres of oceanfront land they own.”

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.