For the 3Q16, New York City saw 178 transactions comprised of 284 buildings totaling $3.09 billion in gross consideration. This represents a 15% decline in dollar volume, a 1% decline in transaction volume, and 22% decline in building volume compared to 3Q15, which saw 363 properties trade across 180 transactions totaling $3.652 billion in gross consideration.
Compared to the previous quarter, 3Q multifamily sales were even in terms of transactions while dollar volume was down by 18%.
Strong pricing continued to hold or appreciate across most measures in Northern Manhattan, The Bronx, and Queens. Manhattan and Brooklyn, however, showed some signs of modest softening. Looking at 6-month trailing averages, Manhattan cap rates rose for the second quarter in a row, hitting 3.87% which is up 27 basis points compared to the 1Q16. In Brooklyn, average cap rates are up a more modest 13 basis points since 1Q16. Buyers appear to be pricing in on higher interest rates as well as the supply of new rental units coming to market in the next few years. Nonetheless, our sense is that these trends reflect a modest correction from historically low cap rates and we will closely monitor how the pricing trends evolve.
Submarket Overview
Manhattan:
Manhattan experienced relatively light dollar volume during the 3Q16 as its $972 million in sales represents a 32% drop than that of the second quarter of 2016. In Hell’s Kitchen a portfolio of 14 mixed-use walk-up buildings at 308-310 & 318-340 West 49th Street traded for $110 million, or $804 per square foot with a reported capitalization rate of 4%. A notable Upper East Side sale was a 6-story, 27-unit elevator building at 225 East 82nd Street that sold for $11.85 million, or $1,000 per square foot.
Brooklyn:
Several institutional-caliber transactions north of $20 million drove 3Q Brooklyn multifamily dollar volume 5% higher on a year-over-year basis despite a 15% dip in transactions. Flatbush was one of the city’s most transactional neighborhoods, while Williamsburg was a leader in dollar volume during the last six months, seeing over $228.6 million in gross sales. A notable transaction was in Gowanus at 335 Carroll Street, the 30-unit elevatored building traded for $27.2 million, or $907 per square foot.
Northern Manhattan:
Northern Manhattan saw fewer transactions despite a modest uptick in year-over-year dollar volume. The submarket saw 27 transactions consisting of 50 buildings, totaling $662.7 million in gross consideration, which represents a 10% increase in dollar compared to 3Q15. One notable Washington Heights sale was a 6-story, 32-unit walk-up building at 520 West 174th Street that sold for $7.95 million, or $427 per square foot. Elsewhere, in Hamilton Heights, a 21-unit walk-up building 584-586 West 152nd Street sold for $6.66 million, or $351 per square foot.
Bronx:
3Q16 Bronx multifamily transactions continued to show price appreciation even though transaction volume and dollar volume is down compared to 2015 levels. Similar to 2Q16, sales during 3Q16 mostly consisted of small to midsize assets. One example is the recent purchase of 1011 Carroll Place, a 56-unit elevatored building in Melrose that sold for $11 million, which represents $184 per square foot or $196,429 per unit. Another sale demonstrating the strength of Bronx multifamily pricing took place at 1459 Taylor Avenue in Parkchester, which sold for $4.5 million or $189 per square foot.
Queens:
For the third straight quarter, Queens showed considerable year-over-year growth in multifamily dollar volume. The borough saw 22 trades consisting of 29 buildings and $326.6 million in gross consideration during Q316, which represents a 65% year-over-year increase in dollar volume. One notable trade was an elevator multifamily building in Elmhurst at 51-25 Van Kleeck Street with 76 units that sold for $21.1 million, or $325 per square foot and a reported capitalization rate of 3.35%. In Sunnyside, a 55 unit elevator multifamily building at 47-46 40th Street sold for $15 million, which equates to $298 per square foot and $272,000 per unit.
To view the full report, please click here: http://arielpa.nyc/research/report-MFQIR-Q3-2016
