NYREJ recently sat down with Shimon Shkury, president of Ariel Property Advisors, a New York City investment property sales firm, who shared some of the highlights from Ariel Property Advisors' Multifamily Quarter in Review New York City: Q3 2015.

Q: How did the multifamily market perform in the third quarter?

A: Even with the imminent interest rate increase, New York City multifamily figures experienced a strong 3Q and gained momentum heading into year-end partly due to an extremely robust month of September and a number of large portfolios exchanging hands.

Q: What contributed to the big gains in this quarter?

A: All the submarkets are experiencing strong pricing metrics. The multifamily market in Manhattan remained strong with several institutional caliber sales achieving over $950 per square foot which helped to drive the boroughs dollar volume. Brooklyn also outpaced expectations yet again. The borough saw a 50 percent gain in dollar volume year over year with $751.310 million in gross consideration. The Bronx saw a slew of portfolios trade above $11 million. A package in the Bronxwood section of the Bronx, consisting of 649,655 & 690 Allerton Avenue, sold for $34.3 million and secured over $200 per square foot.

Q: What pricing trends are you seeing?

A: Pricing throughout the city continues to advance by most measures. The average price per foot across NYC in 2015 has increased 17% year-over-year, after an already robust 15% increase from 2013 to 2014. Cap rates across the city have compressed by an average of 26 basis points from 2014 to 2015, following two consecutive years of 58-basis point decreases. This means that over just three years, cap rates have compressed by a total of 142 basis points. In Manhattan alone, 2015's average price per square foot stands at just over $900 per square foot, which is 50% higher than 2013's average of $600. Comparing other 2015 pricing metrics to 2013 levels, cap rates compressed 102 basis points to 3.61%, and the gross rent multiple increased to 19 times from 15 times.

Q: How did the submarkets perform in the third quarter?

A: Manhattan led the way in the 3Q as the submarket accounted for almost half of the city's dollar volume with $1.816 billion in gross consideration. The healthy figure was propelled by the $670 million sale of the Caiola Portfolio. The portfolio consisted of approximately 1,000 apartments throughout 25 buildings, concentrated mostly in Chelsea and the Upper East Side. In Gramercy, Stone Street Properties picked up a package of elevatored buildings on East 22nd Street for $123 million, or roughly $1,000 per square foot. The buildings were marketed as a potential condo conversion, but it is believed new ownership will continue to operate the buildings as rentals.

Although Brooklyn saw a decrease in dollar volume compared to its tremendous 2Q15, the borough saw a 50 percent gain in dollar volume year over year with $751.310 million in gross consideration. The quarter's largest transaction involved one of the city's most active multifamily players this year, Akelius Management, who picked up a 6-building, 393,000 square foot portfolio scattered throughout Crown Heights, Prospect Lefferts Gardens and Flatbush. The Swedish investment firm purchased another 200-unit Crown Heights portfolio in May, strengthening their presence in the neighborhood. In Brooklyn Heights, Benchmark Real Estate Group picked up 25 Monroe Place, a 67-unit elevatored rental building, for $50 million, or $823 per square foot.

Northern Manhattan posted impressive 3Q numbers, recording quarter to quarter and year over year gains in dollar volume with 29 percent and 12 percent increases, respectively. The submarket owned the largest trade outside of core Manhattan, as a 24-building, 578-unit portfolio located in West Harlem sold for $148.5 million, which equates to $365 per square foot and $257,000 per unit. The portfolio last exchanged hands in 2013 for $75 million. In East Harlem, a 36-unit mixed use building located at 124-128 East 107th Street sold for $9.15 million, or $449 per square foot. The sale represents a 140% increase from the last time the property exchanged hands in 2012 for $3.81 million.

Bronx multifamily figures were aided by a surge of large-scale portfolios trading in July, as the borough saw three sell for more than $40 million. One such portfolio included a 272-unit, 264,241 square foot portfolio concentrated in Belmont and West Farms that sold for just over $41 million, which translates to $155 per square foot and $151,029 per unit.

Queens experienced an uptick in dollar volume compared to 2Q15 with$203.262 million in gross consideration - a 19% increase despite fewer transactions and fewer buildings trading hands. Dollar volume was pushed by the $134 million sale of The Opal located at 75-25 153rd Street in Flushing, accounting for well over half of the volume. The luxury rental building sold for $248 per square foot and was the city's fourth largest transaction in the 3Q.

Q: What do you see on the horizon for the multifamily market this year?

A: Investor confidence continues to grow stronger as 2015 progresses. Local economic growth is strong, unemployment is low and New York is drawing people from around the world to live and invest. So far, the market has showed no signs of slowing down which is a result of institutional sales driving the market, a favorable market for sellers and fundamentals that continue to strengthen.

Q: Where can we get a copy of Ariel Property Advisors' Multifamily Quarter in Review New York City: Q3 2015?

A: Copies of the Multifamily Quarter in Review New York City: Q3 2015 and all of our research reports are available on our website at arielpa.nyc/investor-relations/research-reports.

Shimon Shkury is founder and President of Ariel Property Advisors, New York, N.Y.