NEW YORK, NY – April 15, 2019 – Uncertainty surrounding the looming expiration of the state’s rent regulation laws made a profound impact on New York City’s multifamily market in the first quarter, with sales slumping to their lowest level in nearly nine years. All three volume metrics recorded sizeable declines on a quarterly and annual basis, while pricing was a mixed bag.

Last year’s Democratic takeover of New York State’s Senate raised the prospect that dramatic changes are going to be made to the current rent regulation rules, which are set to expire on June 15th. Proposals being talked about to be eliminated include: 1) vacancy decontrol 2) vacancy rent increases 3) current preferential rent structure 4) Major Capital Improvements (MCIs) and Individual Apartment Improvements (IAIs).

“Investors understandably stayed sidelined in the first quarter since some of the proposals could have a big impact on the market, with certain properties more vulnerable than others,” said Shimon Shkury, President and Founder of Ariel Property Advisors. “We expect the second quarter of this year to be slow as well in anticipation of the new regulations.”

From January through March, New York City’s saw $2.0 billion in multifamily sales take place across 75 transactions and 110 buildings. Of note, the City’s transaction volume was the lowest since the third quarter of 2010. When compared to the fourth quarter of 2018, dollar, transaction and building volume slid 48%, 31%, and 59%, respectively, according to Ariel Property Advisors’ recently released “Multifamily Quarter In Review.” To view, click on: http://arielpa.com/report/report-MFQIR-Q1-2019 Compared to the first quarter of 2018, transaction, building and dollar volume dropped 43%, 50%, and 22%, respectively.

Based on a 6-month trailing average ending in March, the price per square foot in Brooklyn and Queens both rose 11%. The average price per square foot decreased in Manhattan and Northern Manhattan, while they held steady in The Bronx.

Submarket Overview:

Manhattan:

Manhattan registered across-the-board declines in volume metrics. For the quarter, Manhattan saw $801.3 million in gross consideration, representing a quarter-over-quarter drop of 51%. The 21 transactions in the sub-market saw the sale of 29 buildings, representing declines of 40% and 51%, respectively. The largest transaction was the $260 million sale of 450 Washington Street in Tribeca by The Related Companies.

For Manhattan pricing metrics, see page 6 of APA’s report.

Northern Manhattan:

Northern Manhattan also saw broad-based declines. The 5 transactions in the region saw the sale of 13 buildings for a total consideration of $94.5 million. Compared to the fourth quarter of 2018, transaction, property volume and dollar volume tumbled 76%, 88%, and 86%, respectively. The sale of 454 Fort Washington Avenue for $18.25 million was the largest sale of the quarter.

For Northern Manhattan pricing metrics, see page 6 of APA’s report.

The Bronx:

The Bronx saw declines in all three volume metrics. The 17 transactions in the area saw the sale of 23 buildings for a total consideration of $140.5 million, representing quarter-over-quarter decreases of 11%, 44% and 46%, respectively. The $23.85 million sale of 201 East 164th Street by The Lightstone Group was the largest transaction in the borough.

For The Bronx pricing metrics, see page 6 of APA’s report.

Brooklyn:

Brooklyn recorded 18 multifamily transactions comprised of 27 buildings, representing decreases of 18% and 39%, respectively, versus the fourth quarter of 2018. Dollar volume jumped 44% to $688.7 million, which can partly be attributed to the $95.74 million sale of the South Brooklyn Multifamily Portfolio to Parkoff Management, the largest portfolio sale in the quarter. The 358-unit Bay Ridge asset consisted of 5 elevator properties.

For Brooklyn pricing metrics, see page 6 of APA’s report.

Queens:

Queens experienced 14 transactions comprised of 18 buildings and totalling $279.76 million in gross consideration. Compared to the fourth quarter of 2018, transaction volume increased 17%, while building and dollar volume dropped 10% and 66%, respectively. The largest sale of the quarter was Mega Contracting Inc.’s $75 million sale of 31-57 31st Street to Hubb NYC in Astoria.

For Queens pricing metrics, see page 6 of APA’s report.

Methodology For Report:

The multifamily transactions included in Ariel Property Advisors’ analysis occurred at a minimum sales price of $1 million, with a minimum gross area of 5,000 square feet and with a minimum of 10 units. Pricing metrics are based on trailing 6 months averages.

To view the full report, please click here: http://arielpa.com/report/report-MFQIR-Q1-2019