NEW YORK, NY – August 2, 2024 – The dollar volume of investment sales in the Bronx rose 13% to $445 million in 1H 2024 compared to 2H 2023, according to Ariel Property Advisors’ Bronx 2024 Mid-Year Commercial Real Estate Trends report. Transactions fell 10% to 90 for this period

“The multifamily market in the Bronx continued to face challenges in the first six months of the year as evidenced by total dollar volume coming in below $500 million,” said Ariel Property Advisors Founding Partner Victor Sozio. “Rising expenses, especially insurance costs, combined with high interest rates and regulations hurt all multifamily owners but especially those with predominantly rent-stabilized buildings.”

Ariel Senior Director Jason Gold added, “In the multifamily market, buildings with at least 75% rent-stabilized units accounted for approximately 53% of dollar volume and 67% of transaction volume, the highest in both categories since H1 2021. In many cases, these transactions were driven by mortgage maturities.”

“The development market saw 33 transactions in 1H 2024, approximately 37% of the total transaction volume in the Bronx in the first half of this year, which is a new record for the borough,” Ariel Director Daniel Mahfar said. “We expect this trend to continue as the Bronx offers developers a low basis for new construction projects that will also benefit from the recently approved 485-x tax exemption.”

The report noted that a major rezoning in the Bronx is expected to produce new housing along 46 blocks surrounding the new Metro North stations in the Parkchester, Van Nest, and Morris Park neighborhoods. Expected to be finalized by 2027, the rezoning will yield 7,000 apartments, 300,000 SF of retail space, 1.6 million SF of life science space, and 1.2 million SF of community facility space.

The following is a summary of the performance asset classes in the Bronx in 1H 2024:

Multifamily

      •  Compared to 2H 2023, multifamily dollar volume increased by 38% in 1H 2024 from 2H 2023 for a total of $208.5 million. Transaction volume declined by three transactions to 36 over the same period.
      •  Cap rates for all multifamily assets rose to 6.90% in 1H 2024 and buildings sold for $167/SF and $142,945/unit.
      •  Rent stabilized assets sold for less, $115/SF and $108,000/unit, the lowest level since 2014, a direct result of HSTPA, which has curtailed the ability of owners raise rents to meet rising expenses in addition to higher cost of debt.

Development

      •  A total of 33 development site transactions were recorded in the first six months of 2024 totaling $166.4 million, which marked a 50% and 86% increase, respectively, compared to H2 2023.
      •  The average price per buildable square foot reached $110 in H1 2024, a new pricing high for the borough.
      •  The largest trade, a vested 421-a development site at 286 Rider Avenue in Mott Haven, sold for $15 million, or $154/BSF. Plans for a 105-unit rental complex at the site have been filed.

Industrial/Warehouse/Storage

      •  The Bronx saw five industrial transactions totaling $25.9 million, 71% and 56% declines, respectively, from 2H 2023.
      •  Dollar volume hasn’t been this low since the first half of 2013.
      •  Two trades accounted for most of the dollar volume--780 East 138th Street, a 76,000 SF storage building purchased for $8.85 million, and the $7.2 million purchase of 320 & 330 Tiffany Street, two industrial properties totaling 17,400 SF.

Ariel Property Advisors’ Bronx 2024 Mid-Year Commercial Real Estate Trends report is available here.