NEW YORK, NY – January 11, 2018 – Investor enthusiasm for New York City multifamily properties gained considerable steam in November, with transaction volume registering its first annual increase of the year. Building volume also climbed, with the number of properties sold far exceeding the same month in 2016, a period when the U.S. presidential election kept many participants sidelined.
Portfolios sales in the outer-boroughs, namely Queens, Northern Manhattan and Brooklyn, drove transaction and building volume higher, while Manhattan recorded the worst dollar volume out of all the sub-markets in November, reaching its lowest level in more than six years.
For the month, New York City saw 40 multifamily transactions comprised of 57 buildings totaling $578.20 million in gross consideration. On a month-over-month basis, transaction and building volume rose 8% and 24%, respectively, while dollar volume slipped 15%. On a year-over-year basis, these figures represent increases of 25% and 30% in transaction and building volume, respectively, but a 25% decrease in dollar volume.
Queens shined bright in November, with the borough’s dollar volume accounting for an impressive 32% of the City’s tally. The Bronx and Northern Manhattan also saw notable activity, with each comprising 25% of the month’s building volume. Dollar volume in Brooklyn, meanwhile, bounced back in November after registering its second worst month of the year the previous month.
In terms of pricing, The Bronx was the only borough to see every pricing metric rise versus the same period in 2016, while Brooklyn saw price per square foot leap 10.5% year-over-year. Meanwhile, capitalization rates compressed 2.7% and 8.1% in Manhattan and Brooklyn, respectively.
From a macroeconomic perspective, the Federal Reserve, as widely expected, raised short-term interest rates in December and is forecasting three more rate hikes in 2018. Inflation has been muted, but many believe it will pick up given a string of robust economic data, higher energy prices and the passage of tax cuts. If U.S. growth picks up considerable steam and inflation firms, the Fed may hasten its approach to interest rates increases.
Manhattan underperformed all sub-markets for the first time since February 2011, while gross consideration reached its lowest since May 2011. The borough was also the only sub-market to weaken month-over-month, with nine transactions consisting of nine buildings totalling $75.22 million, representing sizable declines on both a month-over-month and year-over-year basis.
The largest transaction during the month took place in SoHo, where a 39-unit elevator building located at 37-39 King Street sold for $17.5 million, representing $873 per square foot and a reported capitalization rate of just over 2%.
Northern Manhattan experienced a stellar month, notching large across-the-board increases. All volume metrics, except for dollar volume, increased on a month-over-month and year-over-year basis, led by four transactions above $10 million, three of which were portfolios. During the month, 15 properties sold in 8 transactions for a total consideration of $104.98 million, translating into astonishing 100%, 150% and 76% leap in transaction, building and dollar volume versus the prior month.
The largest ale of the month took place in Inwood, where Heritage Realty purchased a three-building portfolio consisting of 161 units for $41 million, or $303 per square foot and $254,658 per unit.
The Bronx also saw robust activity, with the borough seeing nine transactions consisting of 14 buildings for $110.60 million in gross consideration in November, reflecting a month-over-month increase of 29%, 75% and 3% in transaction, building and dollar volume, respectively. On a year-over-year basis, The Bronx registered gains in dollar and building volume, while transaction volume held steady.
A Highbridge elevator portfolio was the largest transaction of the month. The 264-unit, four-building portfolio was purchased by Emerald Equity Group for $47 million, which translates to $166 per square foot, and more than $178,000 per unit.
Brooklyn rebounded sharply in November following one of its worst months of the year. Dollar, transaction and building volume gained versus the previous month and year, which was led by four portfolio transactions that sold for more than $10 million. For the month, Brooklyn saw nine transactions consisting of 13 buildings for a combined dollar volume of $103.95 million.
Notable sales included the $26.5 million sale of 4710 Avenue D & 787 East 46th Street, a two-building elevator East Flatbush portfolio consisting of 128 units, and the $17.90 million sale of a 49-unit portfolio at 291 & 292 Lincoln Place in Prospect Heights, where the price for the two buildings fetched $437 per square and a reported 3.66% capitalization rate.
Queens dominated in November, leading the City in dollar volume for the second time in 2017. The borough registered the highest totals of the year during the month, due largely to its first $100 million sale. In fact, with $183.45 million in sales, the sub-market saw nearly as much during the month as it did the previous five months combined. While generally less transactional than other sub-markets, Queens saw substantial month-over-month and year-over-year gains across all volume metrics.
The borough’s largest sale was the 924-unit rental complex at 711 Seagirt Avenue in Far Rockaway that Treetop Development purchased for $135 million, or $181 per square foot.
To view the full report, please click here: http://arielpa.com/report/report-MFMIR-Nov-2017
Ariel Property Advisors is a commercial real estate services and advisory company located in New York City. The company covers all major commercial asset types throughout the NY metropolitan area, while maintaining a very sharp focus on multifamily, mixed-use and development properties. Ariel’s Research Division produces a variety of market reports that are referenced throughout the industry.
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