NEW YORK, NY – February 15, 2023 – Northern Manhattan saw 99 investment property transactions in 2022, the same level as 2021, and dollar volume of $674 million, a 60% year-over-year decline but 17% higher than 2020, according to Ariel Property Advisors 2022 Northern Manhattan Year-End Commercial Real Estate Trends report.

“Consistent with the 1H21, Northern Manhattan saw few institutional caliber sales taking place north of $20 million,” said Ariel Founding Partner Michael Tortorici. “The reliance on small to mid-size deals under $20 million drove dollar volume down year-over-year, but still represented a notable improvement over Covid figures seen in 2020.”

Mark Anderson, Director, Investment Sales, added, “While still lower than levels seen pre-HSTPA, multifamily transactions totaled 72, a 22% improvement on a year-over-year basis and nearly double the amount seen in 2020.”

Multifamily:

• Multifamily dollar volume totaled $484 million, a 15% decline from 2021. With a majority of multifamily deals occurring under $10 million and no multifamily transactions above $100 million last year, dollar volume remained subdued compared to pre-Covid activity levels.
• For the year, the average cap rate came in at 5.33%. While this is roughly even with 2021 levels, most sales occurred in the first three quarters of the year when buyers could lock in lower interest rates. With the significant shift in interest rates, the ongoing effects of the HSTPA legislation and negative buyer sentiment since September, cap rates are expected to head higher next year.
• The 2022 average price per square foot was $312 and average price per unit was $212,971, both relatively consistent with levels seen since 2019.

Development:

• Dollar volume totaled $104 million and transaction volume totaled 16, both below levels seen during Covid and similar to market activity in 2012.
• 66% of development site transaction volume and 75% of development site dollar volume occurred in the first half of the year as buyers sought to lock in 421a Affordable New York tax benefits and get ahead of rising interest rates.
• Buyers and sellers need clarity on what, if any, new development tax abatement program will be enacted by New York State. Until then, development site sales are expected to lag compared to recent historic trends, despite strength in the residential rental and condominium markets.
• It is telling that the average price per buildable square foot of $163 is marginally down from 2021 and 2020 levels and represents a 28% decline from 2016’s high of $228 price per buildable square foot.

To read the full Northern Manhattan 2022 Year-End Commercial Real Estate Trends report, click HERE.