The exit determines the total return. Every NYC commercial real estate hold has at least one exit decision — refinance, recap, or sell — and the path you choose materially affects net proceeds, tax exposure, and the timing of future capital deployment. Sophisticated owners plan exits at acquisition; the rest react to market conditions.
Refinance vs Sale
A refinance returns capital tax-deferred (no realization event) and lets you retain ownership upside. A sale produces a realization event but lets you redeploy capital into higher-IRR opportunities. The decision: does the asset's forward IRR (after refi) exceed your IRR on alternative deployments? If yes, refi. If no, sell. For most NYC commercial real estate at year 5-7 of hold, the math favors sale when there's a strong off-market buyer pool.
1031 Exchange Path
When sale wins on IRR but the tax bill is significant, a §1031 like-kind exchange defers federal and state capital gains. The 45-day identification and 180-day closing clocks are tight — exchangers need a vetted replacement pipeline ready to deploy. Skyline maintains an active off-market inventory specifically structured for 1031 exchangers; the firm has placed many exchangers into Manhattan and Brooklyn replacement assets.
Market Timing
Cap rate cycles are real but unpredictable. The disciplined view: sell when the asset's forward IRR is materially below market alternatives and the cap rate environment supports a tight exit; refinance when forward IRR is acceptable and the rate environment supports tight leverage. Don't chase peak — the best NYC operators sell into strength, not after the cycle turns.
Broker Selection
The choice between an off-market single-broker process and a public listed campaign affects both proceeds and certainty. Off-market processes win on confidentiality, speed (typically 90-180 days), and tighter buyer pool quality. Public listings win on maximum bid count for assets where lots of bidders matter. Skyline runs both — the firm's off-market practice has closed $976M+ in confidential NYC commercial real estate transactions.
- Build the exit plan at acquisition — model refi-at-year-3 and sale-at-year-5 and sale-at-year-7 scenarios.
- Engage your tax counsel 12+ months before a planned sale to evaluate 1031 vs. taxable.
- For NYC commercial assets, off-market processes are often the higher-net-proceeds path despite headline pricing equality.
- Skyline provides confidential broker opinion of value (BOV) reports for owners weighing an exit.
Robert Khodadadian and Skyline Properties have advised on hundreds of NYC commercial real estate exits across $976M+ of closed transactions. The firm provides confidential exit strategy advisory and broker opinion of value reports. Email info@skylineprp.com for a confidential consultation on your exit timing.