Shimon Shkury: Hi everyone. Shimon Shkury with Ariel Property Advisors here with coffee and cap rates our podcast. And today we're gonna talk about the Bronx with my two esteemed colleagues. First, Jason Gold. Hey, Jason, how you doing?

Jason M. Gold: Doing well. How are you, Shimon?

Shimon Shkury: I'm well as well. And we also have Daniel Mahfar here with us today. Daniel, how are you?

Daniel Mahfar: Hi Shimon. Thanks for having me.

Shimon Shkury: Awesome. So guys, look, I, I know that when we are looking at our 2023 report we see like anywhere else in the city a substantial drop in value in volume. Not so much value two, but mostly in volume, about a 22% drop to only $1.8 billion in the Bronx. But I think the Bronx didn't suffer as much as the other areas, at least not in the multifamily asset class. Jason, what do we see there in the multifamily asset class that held the level of transactions and dollar volume somewhat stable.

Jason M. Gold: Yes, thank you, Shimon. What, what we're seeing really firsthand is investors are being very cautiously optimistic on the multifamily asset class throughout the Bronx. With the current lending environment that we're currently in, we've seen the cap rate drive closer to, or trending closer to a seven cap across. The all multifamily and the price per unit dropping down and price per square foot dropping down to a level where the return is still it's a good return for investors where they can still make a good, a good return on their investment. But we've also seen firsthand that we're dealing with a lot of affordable housing throughout New York, which has seen an uptick throughout the institutional investors and a lot more local investors that are getting into that environment.

Shimon Shkury: Yeah, I think, I think you're hitting it right on the head. I mean, what we've seen is that Nuveen bought the close to a billion dollars from Omni. And a lot of that these buildings, as you stated a second ago, are in the Bronx. And a Bronx, as we all know, is comprised from a multifamily perspective with a lot of affordable housing buildings with capital A, but also a lot of rent stabilized housing. And because of that specific transactions, I think we have seen the transaction volume stay very stable. And we'll talk more about the multifamily moving forward in a second. But I'm, I'm curious to know Daniel, what have we seen in terms of development side trades 'cause they usually tell a story about where the housing market is going moving forward.

Daniel Mahfar: What have we seen in 2023? Sure. So the, the store with development starts that, first of all, this is the sixth year in a row that price per buildable square foot on average in the Bronx has grown even with a pretty decent dip in transaction volume. This is led by two different kinds of land trades. The first and foremost that is on most people's minds is the 421A tax abatement that expired last year. That there are still very few, but still highly, highly desirable sites that have the tax abatement vested. So developers have been keen on acquiring those sites at record prices. This is also led by the growth in program voucher rents led by Section eight and the feps programs by the city that these rents have been growing year over year, and developers are being more aggressive on their underwriting on growth in those departments. The second type of land trade that has been very active is also lands without a 421A. They trade lower than these sites that have the abatement vested, but they still are very demanded by one affordable developers as well as nonprofits. And a lot of these times the city gets involved with the pricing on the transactions here as well due to giving subsidy money in a lot of those cases.

Shimon Shkury: Thank you. And so, basically the developers there in the Bronx are finding value where they're is an incentive they vested for 21 A and where there is the ability to develop maybe for feps you know, vouchers and also they're basically finding value if the city, mostly the city, but also the state sometimes cooperate and provide the subsidies needed for affordable housing, they're willing to buy land. So these incentives have to be aligned for developers to build. And that's something that we're saying all the time with regards to producing or the production of housing. And let's, let's jump right into what we're seeing in, you know, 2024 moving forward. And I know we had a couple closings. Jason, why don't you start with one of 'em and then Daniel, we will continue with the other and we'll take it from there.

Jason M. Gold: Of course. We, so we recently closed 1500 Noble Avenue, which was a 237 unit 17 story elevated property former Mical Llama. And this is a transaction that was through an investor that was very optimistic about the Bronx and it's cautiously optimistic that we're seeing across the board, but this is a prime example of larger transactions, larger buildings a hundred percent rent stabilized that are gonna be transacting throughout the course of 2024. We're gonna see this continued trend through happen across the, throughout the year.

Shimon Shkury: Thank you. And Daniel, what else did we close on?

Daniel Mahfar: We had also arranged the sale of a six building portfolio for a long-term landlord. Buildings were in good condition, paperwork was in good order, and it's still traded for a seven and a half cap. It did have an expiring tax abatement later in the decade but it's just another testament that investors are looking for higher yield in the Bronx and all over. But we still do find a demand for these types of assets when the buildings are in, when there's minimal CapEx as well as having good standing paperwork as well.

Shimon Shkury: Yeah, the paperwork is a big, big item for rent stabilized today. And both of you mentioned these two buildings that we're closing just now. We know that we have a tremendous amount of inventory in the Bronx, specifically both on the affordable housing side and on the rent stabilized side. So chances are a transaction or, or this year is going to continue to be a very transactional year for the Bronx, specifically in multifamily and possibly also in land. And, and that, that, again, that coupled with possible lower interest rates the rezonings that took place in the Bronx just recently which is a good news for the Bronx, maybe a 421A or 485X by the end of the year, which allows for more development and the Mimi program and the affordable housing and maybe some legislation that helps mitigate insurance costs. All of these good things are very hopeful for New York City, but also for the Bronx specifically. So wishing all of us a great 2024. Jason and Daniel, thank you so much for participating in this and we look forward to hearing more of you and in the near future.

Daniel Mahfar: Thank you, Shimon. Thank you for having us.

Jason M. Gold: Thank you, Shimon.