NEW YORK, NY – July 27, 2023 – Dollar volume in the Bronx investment sales market jumped 86% to $1.51 billion in 1H 2023 compared to 2H 2022, while transaction volume for the period remained steady, increasing a modest 3% to 111 transactions, according to Ariel Property Advisors’ Bronx 2023 Mid-Year Commercial Real Estate Trends report.

“The rise in dollar volume can be directly attributed to Nuveen’s purchase of the Omni Affordable Housing Portfolio,” said Senior Director Jason Gold. “The entire portfolio traded for a total capitalization of approximately $956 million, with about 66% of the units valued at $593 million located in the Bronx.”

Daniel Mahfar, Director, added that metrics improved across several asset classes in the Bronx in the first half of 2023. “Development set a new record at $103/BSF as more developers weighed building affordable housing and land-banking in anticipation of Mayor Adams’ proposed rezoning of areas surrounding Metro-North stations,” he said. “Additionally, at $400/GSF, industrial pricing 1H 2023 was higher than any other year on record except for 2022 due to strong underlying fundamentals including rent growth and stable, low vacancy rates.”

Multifamily

      • Although multifamily transaction volume saw a slight 8% decline to 44 trades in 1H 2023 from 2H 2022, dollar volume jumped 154% during this period to over $1 billion, mainly due to Nuveen’s acquisition of Omni’s affordable housing portfolio.

      • In addition to Nuveen’s acquisition, Vistria purchased a partial interest in 820 Colgate Ave and 825 Boynton Ave, affordable properties regulated under the Article XI program, for $104 million.

      • Multifamily pricing dropped to $152/SF, the lowest level for this asset class since 2014. The price per unit also fell to a new low of $131,033 per unit. Additionally, cap rates rose to 6.18%, consistent with the lower pricing metrics that were expected for the asset class because of the increased cost of capital.

Industrial/Warehouse/Self Storage

      • Dollar volume in the Bronx industrial sector increased 18% to $159 million in 1H 2023 from 2H 2022 and transaction volume rose half-over-half by 45% to 16.

      • Petroleum distributors Buckeye Partners sold 1020-1040 East 149th Street for $73.5 million, which translates to $282/SF. Sprague Operating Resources LLC purchased the gas distribution site in March, which was the largest industrial sale in the Bronx so far this year.

      • The Bronx Logistics Center, the largest multi-story distribution center in the City with 1,300,000 square feet, is expected to be completed later this year. With strong underlying fundamentals, the increased supply is not expected to heavily affect demand.

Development

      • The development sector rebounded in 1H 2023 when compared to 2H 2022 with dollar volume rising 45% to $145 million and transaction volume rising by 50%, to 27 trades. Compared to 1H 2022, however, dollar volume fell 31% and transaction volume dropped 37%.

      • Interestingly, the price per buildable square foot rose to $103/SF, which is the highest level ever seen in the Bronx. While residential rents continue to grow across the five boroughs, the demand for land with vested 421a tax abatements is outpacing supply which is driving up prices for these sites.

      • Development sites for affordable housing are also sought after in the Bronx. Radson Development purchased 748 East 241st Street from Enclave Equities for $22.4 million ($138/BSF). The development will be 10 stories with 150 apartments and 20,000 square feet of retail. Additionally, the Stagg Group purchased Overlook Manor from Manhattan College for $18 Million and plans to convert the former college dormitory into low-income housing.

Commercial

      • Compared to 1H 2022, the commercial sector in 1H 2023 saw a 43% drop in dollar volume to $81 million and a 37% decrease in transaction volume to 17 deals.

      • The price per square foot for commercial properties also dipped to $440/SF, a 17% decrease from the previous two years. Higher interest rates have demanded higher cap rates, resulting in lower valuations.

      • Commercial assets in prime locations are still demanding higher pricing for irreplaceable retail, however. One example is 2449 Morris Avenue, which was purchased by Portabella from Roberts Equities LLC in January for $20.1 million. The asset’s prime corner location on Fordham Road and strong tenancy anchored by Duane Reade helped it achieve $1,135/SF.

To read Ariel Property Advisors’ Bronx 2023 Mid-Year Commercial Real Estate Trends report, please click here.