Bronx real estate investors have plenty to cheer about, with property values in many cases doubling from earlier this decade. With few roadblocks ahead, prices are poised to appreciate further as institutional and private buyers continue to snatch up bargains amid rising costs in other areas of the City.

​(From left to right) Mark Anderson, Director, Investment Sales, and David Baruch, Senior Analyst

Indeed, Bronx investment sales registered another year of price growth in 2016 as strong demand outpaced supply. For the year, the borough saw 351 transactions consisting of 538 properties totaling approximately $2.26 billion in gross consideration, according to Ariel Property Advisors' newly released “Bronx 2016 Year-End Sales Report.“ In 2016, dollar, transaction and property volume slid 16%, 5%, and 7%, respectively, but the declines reflected a pullback from 2015's record-setting year, a period driven by several institutional-caliber transactions.

Multi-family property price appreciation in the borough was substantial, with pricing metrics jumping an average 13% overall for the year. More specifically, cap rates, a widely used metric to gauge the value of a property value relative to its income stream, compressed by 36 basis points to 5.19%. Price gains in the Bronx were the highest of any sub-market aside from Queens, with gross rent multiples leaping an astonishing 111 points to 11.06 points.

Price per unit and price per square foot also saw huge increases, rising 19% and 15%, respectively. Even more striking is the growth since 2012, with price per unit and price per square foot both leaping nearly 90%, ending 2016 at $163,290 and $184, respectively. Led by the largest transaction of the year, Emerald Equity Group's $140 million purchase of the “Bronx 1000“ Portfolio, which consisted of 38 buildings, the multi-family market captured the lion's share of the borough's dollar and transaction volume, snatching 65% and 58%, respectively.

Other transactions that highlighted the strength of the multi-family market in 2016 include the purchase of 1511 Sheridan Avenue by Black Spruce Properties for $34.7 million, a startling 45% jump from the property's previous sale price in 2015.

New investors, both institutional and private, continued to make headlines last year. National investment firm, The Lightstone Group acquired several multifamily properties in The Bronx, including the $11 million purchase of 1011 Carroll Place, while Torontobased Asden Properties purchased 3555 Bruckner Boulevard for $25 million.

Northwest Bronx Shines Bright

Northwest Bronx was one of the most active regions in 2016, with 102 transactions, consisting of 160 properties totaling nearly $800 million. Pricing metrics in Northwest Bronx were particularly impressive in the multifamily asset class, with cap rates the lowest in the borough, at 4.91%, while the gross rent multiple of 11.41 was the highest of any region. Additionally, the area's price per unit was the highest in The Bronx, at $167,689, and its price per square foot stood at $179.

Within Northwest Bronx, the neighborhood of Kingsbridge has seen particularly high demand, due partly to its close proximity to the B, D, and 4 subway lines. Residents are near the Kingsbridge Armory, which is being converted into a huge ice sports center, a development that should undoubtedly draw huge crowds of ice skaters and hockey fans. The region is also home to several cultural and educational institutions, such as Lehman College and Bronx Community College, while Fordham University and the Botanical Gardens are only a short distance away.

Looking ahead, the outlook for 2017 is more uncertain than it has been in recent years, with higher financing costs on the horizon. Nevertheless, interest rates remain historically low, the U.S. economy continues to strengthen, and the borough's relative affordability all bode well for the Bronx real estate market.

Furthermore, major infrastructure projects, and new demand coming from the 18-month shutdown of the L train, should buoy near-term growth. Meanwhile, institutional and private investors will likely continue to spend capital in The Bronx, which has historically been one of the best bets around.