Massey Knakal executives predict that the sales market for office buildings and apartment properties will pick up considerably in 2012, due in large part to a combination of record low interest rates and widespread expectations that the capital gains tax rate will rise next year.

“We’re going to see a natural regression in 2012 back to the norms,” said Robert Knakal, Massey Knakal's chairman, noting that the volume of properties sold in the city has been below the historical average since the recession and is likely to bounce back. “The potential increase in capital gains that could take place in 2013 [is a big driver]. We saw a significant spike in sales volume in 2010 for the very same reason.”

Mr. Knakal predicted that development parcels in the city would be among the best appreciating assets during the year, anticipating they could rise by 20-30 percent in value due a dearth of both residential and commercial development in the city in recent years.

“There has been such a low supply of new product put on the market,” Mr. Knakal said. “Developers anticipate the market two to three years in advance and most are feeling optimistic about the end user demand in that time frame.”

Paul Massey, who with Mr. Knakal co-founded the brokerage company also highlighted the popularity of development sites.

“We were creating thousands of luxury residential units per year but that production ceased three and a half years ago,” said Mr. Massey, who together with Mr. Knakal and other company executives, delivered their comments during a meeting yesterday morning with the media to present their outlook and year end market statistics for 2011.

Massey Knakal compiled a host of encouraging data that shows the sales market in the city is bouncing back since falling precipitously during the economic downturn. Citywide, $25.6 billion of property was sold in 2011, an 80 percent increase from 2010, and 2,122 properties changed hands, a 25 percent increase in volume year over year.

Still the numbers pale in comparison to the boom years. In 2006, $44.5 billion of deals were done and 2007, the most prolific year on record for New York City’s sales market, $62.19 billion of deals were completed, according to Massey Knakal figures. Mr. Knakal didn’t think that dollar volume would swell in 2012 to that level but predicted the market could see between $41 to $45 billion of sales activity.

Pricing on average per square foot appreciated by 6.1 percent across property types in 2011 the company said. While that figure was lower than the wild uptick in value that occurred as the market skyrocketed during the boom years of 2005 to 2007, Mr. Knakal said that the appreciation level was compelling compared to other investment classes. “I think our expectations are skewed by the fact that during the boom years there were huge gains and when the market fell there were big losses, the scale of expectations has been kind of exaggerated,” Mr. Knakal said. “But six percent is very solid. Warren Buffett always says that ten percent returns are outstanding. I think that in a market where treasuries are low, six percent returns on real estate make it a desirable asset class.” Mr. Knakal predicted that prices could outpace 2011’s increase, rising by as much as eight percent on average per square foot in 2012.

James Nelson, an executive at Massey Knakal who participated in the company’s presentation supported Mr. Knakal’s point that real estate was attractive to buyers because it offered compelling returns and stability during a period of continued economic uncertainty.

“Real estate benefits from the trend of investors wanting hard assets,” Mr. Nelson said. “People want something they can touch. Besides gold, real estate is one of the few hard assets and it cash flows.”

Daniel Geiger, Staff Writer, is reachable at DGeiger@Observer.com

After handling its leasing at 535 and 545 Fifth Avenue internally, The Moinian Group has brought on a Cushman & Wakefield team to be its exclusive leasing agent for both buildings, The Commercial Observer has learned.

A team lead by Andy Sachs, an executive director at the firm, along with with Ben Shapiro,Jonathan Fales and Myles Fennon will now have oversee both buildings--at a combined 532,400 square feet of overall space–-under its care.

The buildings, a 36-story office tower at 535 Fifth Avenue and a 14-story property at 545 Fifth Avenue, are located in the Grand Central Plaza district.

"There's obviously a lot of competitive space in Grand Central and [the Moinian Group] realized they have a lot of competition so they went out and went through the process to hire us," Mr. Sachs told The Commercial Observer.

Each office building received "substantial" renovations, including a complete overhaul of the lobbies and decorative upgrades to the bathrooms and corridors, Cushman & Wakefield officials said.

The buildings have a range of spaces that are availabe, from 1,500 square feet to 20,000 square feet.

"We're looking at just upgrading the curb appeal and the profile of the buildings so they have a little bit of a better identity," said Mr. Sachs.

The team is close to announcing an architect for future renovations.

There will be new pre-built standards that will have "lots of glass, more modern in look and feel, so that we can get more light in this space," he added.

A 19,311-square-foot office space on the third floor of the 535 Broadway is currently being demolished, with an option to break through into 545 Broadway and link up the two floors for more than 30,000 square feet of combined space, said Mr. Sachs.

“This 532,400-plus-square-foot pair of properties located two blocks from Grand Central offers unique floor plates of up to 32,000 square feet in one of New York’s hottest commercial corridors," said Greg Weisser, executive managing director at The Moinian Group.

The Moinian Group's Carmel Kashani will act as an additional onsite leasing agent for both buildings.

Daniel Edward Rosen, Staff Writer, is reachable at DRosen@Observer.com