What London's Market Downturn Could Mean for Manhattan

London Bridge is falling down, at least as far as commercial real estate is concerned. And where commercial real estate is concerned, could New York be far behind?

A recent Economist article revealed that property prices in London have fallen “as much as 20 percent from their peak,” and that office rents will drop by 25 percent this year.

Those are some incredibly dismal stats in a market that has long rivaled if not exceeded New York in cachet. Does London’s precipitous fall mean that the Yankees are next?

“It could happen, but I would say the dynamics are different,” said Borja Sierra, executive managing director of the American branch of London-based brokerage Savills. “London is suffering as a result of the lack of debt, but certainly not due to a lack of interest.” In contrast, Mr. Sierra said that while New York also has debt issues, the bigger problem is all of the investors sitting out the market, “waiting for it to bottom.”

“It’s been a much more painful and quicker process [in London],” Mr. Sierra said.

drubinstein@observer.com