NEW YORK, NY – February 8, 2024 – The Northern Manhattan submarket finished 2023 with investment sales totaling $842.8 million, a 28% uptick from the previous year, and 150 properties traded, a 4% increase, making it the only New York City submarket to register gains in both dollar and property volume compared to 2022, according to Ariel Property Advisors’ Northern Manhattan 2023 Year-End Commercial Real Estate Trends report.

In Northern Manhattan’s multifamily market, the average cap rate rose to 6.34%, a +101 basis point increase from the 2022 average.

“The rapid rise of interest rates combined with the 2019 HSTPA rent law has forced a stark decline in multifamily property valuations, specifically in rent stabilized assets, forcing some owners to make the tough decision of selling their assets versus conducting a cash-in refinance,” said Mike Tortorici, Founding Partner at Ariel Property Advisors. “This trend is exemplified by the sale of a 16-building rent-stabilized portfolio in September 2023 for $47 million, which was a 44% discount from the $83.6 million price it saw in 2016.”

The following is a summary of the performance of each asset class in Northern Manhattan in 2023:

Multifamily

      •  Sizeable declines in rent-stabilized building values led to an influx of investment activity in Northern Manhattan’s multifamily market in 2023, resulting in a 34% increase in multifamily dollar volume to $642.4 million. Transaction volume fell 12% to 61.
      •  Of the year’s multifamily transactions, 36% were for buildings comprised of 75% or more rent-stabilized units, which saw their average price per square foot fall from $238 in 2022 to $164 in 2023.
      •  Free market assets saw pricing growth uptown from $440/SF to $484/SF. The largest free market multifamily transaction was the $28.2 million sale of 69 East 125th Street, which was attractive because it had an in-place 421a that won’t expire until 2043.

Development

      •  Development site sales in Northern Manhattan continued to be relatively scarce last year with only 14 properties valued at $76.8 million sold last year, declines of 14% and 35%, respectively. This is both the lowest dollar and transaction volume for this submarket since 2011.
      •  The average price per buildable square foot came in at $161/BSF, on par with 2023.
      •  One notable transaction, a corner development site at 1975 Madison Avenue & 45 East 126th Street in East Harlem, sold for $12 million, or $148/BSF, after trading in 2019 for $252/BSF. Plans call for a 97-unit luxury rental building including 30 affordable units on the site.

The full report is available here.