NEW YORK, NY – February 1, 2015 – Bolstered by large multifamily portfolio transactions and several game-changing commercial and development deals, the dollar volume of investment sales in the Bronx rose above $2.39 billion, a 39 percent increase from the previous year and a 55 percent jump from 2012, according to Ariel Property Advisors’ Bronx 2014 Year-End Sales Report.
Investment sales transaction volume increased by 11 percent to 342, and the number of properties traded increased 20 percent to 577 in 2014 compared to 2013.
The Bronx development market remained in high demand during 2014 and saw an 88 percent increase in dollar volume to $129.7 million over 40 transactions comprised of 73 properties with 2.99 million buildable square feet. Twenty-four properties totaling nearly 2 million buildable square feet traded in the South Bronx neighborhoods of Hunts Point, Melrose, Morrisania, Mott Haven, and Tremont.
“Developments in the Bronx gained momentum in 2014 and that interest is expected to continue,” said Scot Hirschfield, vice president, Ariel Property Advisors. “A leading indicator of this new activity was the Chetrit Group’s fourth quarter closing of 101 Lincoln Avenue in the South Bronx, which the developer plans to combine with two adjacent sites and build at least six residential towers. This project is within the Lower Grand Concourse Waterfront project along the Harlem River south of 145th Street where the borough’s leadership is seeking to create a commercial and residential complex offering up to 4,000 residential units.”
With many affordable housing groups looking for housing and an increasing number of private developers looking to build new market rate housing, it is expected that demand for Bronx development sites will continue, further pushing up pricing. This demand could be bolstered even more with the city’s proposal to upzone a new Bronx neighborhood called “Cromwell Jerome” and target it for affordable housing development.
Multifamily dollar volume year-over-year rose 67 percent to $1.8 billion, transaction volume increased 24 percent to 225, and the number of multifamily properties trading jumped 45 percent to 401 compared to 2013. The multifamily market accounted for 65 percent of the borough’s investment sales transaction volume and 77 percent of its dollar volume. As a further indication of the strong market, the average cap rate compressed from 7.71 percent in 2013 to 6.16 percent in 2014. Additionally, the average gross rent multiple grew from 7.24 to 8.54 over that same period.
“Last year, the multifamily market in the Bronx caught the attention of well-known real estate companies and saw several institutional transactions drive multifamily dollar volume higher,” said Jason M. Gold, associate vice president of Ariel Property Advisors. “In one of the largest multifamily deals of the year, the Related Companies purchased a portfolio consisting of 35 buildings in various North Bronx neighborhoods for $253 million, as well as a 237-unit building in Parkchester.”
The borough’s improving economic environment also directly benefited commercial activity in the Bronx with commercial sales ending the year with $140 million in total sales and office sales surging 567 percent to $130.9 million.
One major transaction was Madison Marquette and Perella Weinberg’s $114 million purchase of the Bank Note Building in Hunts Point, widely considered one of the most architecturally distinctive office properties in The Bronx. A prime retail strip at 305-315 East Fordham Road sold for $34.6 million, or roughly $1,146 per square foot to the Harbor Group. Another notable sale was Ariel Property Advisors’ closing of 4250-4280 White Plains Road, a blockfront retail strip in the Wakefield section of The Bronx. The property was sold to a retailer for $7.15 million, or over $300 per square foot.
The Bronx 2014 Mid-Year Sales Report tracks all development, multifamily, industrial, and other commercial property sales over $850,000. For a copy of the report, please visit http://arielpa.com/newsroom/report-APA-Bronx-2014-Sales-Report.
Ariel Property Advisors is a commercial real estate services and advisory company located in New York City. The company covers all major commercial asset types throughout the NY metropolitan area, while maintaining a very sharp focus on multifamily, mixed-use and development properties. Ariel’s Research Division produces a variety of market reports that are referenced throughout the industry.
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The information contained herein has either been given to us by the owner of the property or obtained from sources that we deem reliable. We have no reason to doubt its accuracy but we do not guarantee the accuracy of any information provided herein. As an example, all zoning information, buildable footage estimates and indicated uses must be independently verified. Vacancy factors used herein are an arbitrary percentage used only as an example, and does not necessarily relate to actual vacancy, if any. The value of this prospective investment is dependent upon these estimates and assumptions made above, as well as the investment income, the tax bracket, and other factors which your tax advisor and/or legal counsel should evaluate. The prospective buyer should carefully verify each item of income, and all other information contained herein.