FOR IMMEDIATE RELEASE

NEW YORK, NY – January 26, 2015 – The New York City multifamily market saw large year-over-year gains in 2014 with dollar volume jumping 39 percent to $12.59 billion, according to Ariel Property Advisors’ Multifamily Year in Review: New York City 2014.

Transaction volume also rose 8 percent to 761 and building volume increased 13 percent to 1,413, compared to 2013 which saw 1,250 buildings sell over 704 transactions valued at $9.075 billion.

Institutional transactions $20 million and above in Manhattan and the outer boroughs played a significant role in making 2014 a standout year, accounting for more than 50 percent of all dollar volume in every submarket other than the Bronx, where it was 47 percent. Neighborhoods that were particularly active were the Upper East Side, Brooklyn Heights, Kew Gardens in Queens, Morrisania in the Bronx, and East Harlem.

“The market continued to experience strong sales volume and the elevated demand pushed prices higher throughout the boroughs,” said Shimon Shkury, president of Ariel Property Advisors. “The Bronx had an especially good year in terms of pricing, but while the average cap rate in the borough dropped 100 basis points year-over-year, at 6.07 percent it is still higher than the rest of the city. Recording 222 transactions, Brooklyn saw more transactions than any other submarket.”

While a number of factors played a role in driving dollar volume and pricing significantly higher in 2014, the strengthening market for residential end-users has increasingly taken center stage. With condominium prices surging to record highs, an increasing number of multifamily building purchases are being made with the intention to convert the existing rental properties to condominium use. This is translating to higher prices per square foot in Manhattan, rising to $866 per square foot in 2014, a 25 percent increase compared to 2013. Manhattan’s dollar volume also rose by 15 percent year-over-year, even as its transaction volume decreased slightly. Outer markets such as The Bronx, Brooklyn, and Northern Manhattan experienced similar market and price expansion.

The following are key highlights from the report:

• Manhattan. Dollar volume for multifamily transactions in Manhattan increased 15 percent to $5.138 billion, despite a slight drop in the number of transactions taking place. This supports the perception that Manhattan is viewed as one of the world’s greatest investor safe-havens, for current owners are choosing not to sell because they cannot find suitable replacement assets that offer the same returns and upside, and buyers are paying ever higher premiums to own core Manhattan assets. Specifically, the Upper East Side claimed four of the top 10 largest multifamily deals in New York City in 2014, including the $485 million sale of two mixed-use elevatored buildings located at 1660 2nd Avenue and 160 East 88th Street.

• Brooklyn. Brooklyn had a tremendous year with more than $2.35 billion in multifamily sales, a year-over-year increase of 88 percent, and 222 transactions, more than any other submarket. Brooklyn also claimed some of the most active neighborhoods in the city including Bushwick, Bedford-Stuyvesant, and Williamsburg. Sales of core multifamily buildings extended to other neighborhoods as well. In December, a luxury rental building at 101 Third Avenue in Boerum Hill sold to a European investor for $52.2 million, which translates to an impressive $746 per square foot.

• Bronx. Investor confidence is very high in the Bronx market heading into 2015 as the average multifamily capitalization rate dropped more than 100 basis points in the past year to 6.07 percent. The bourgeoning South Bronx has attracted a slew of investors, developers, and tenants to pair with a strong pipeline of residential and hotel developments, which had a positive effect on the entire borough’s pricing. While transaction volume in the Bronx was up 18 percent from 2013 to 186, dollar volume increased 49 percent to $1.625 billion.

• Northern Manhattan. With catalysts such as the 125th Street revitalization, rising prices in core Manhattan, and an improving retail scene, investors continue to flock to Northern Manhattan as they look to capitalize on rising rents. East Harlem saw some dramatic growth this year, with some multifamily assets selling for more than $400 per square foot. While Northern Manhattan saw some of the highest growth relative to other areas covered in this reports, it’s worth noting that a large portion of that came from the $1.040 billion sale of Urban American to Brookfield.

• Queens. Queens followed up on a robust 2013 with a solid year, totaling $884 million multifamily sales – down 17 percent from last year. Of note, a Kew Gardens Hills portfolio made up of 12 elevatored buildings and 1,269 units sold for $216 million, or $209 per square foot. Rents continued to climb throughout the borough, most notably in the neighborhoods of Northwest Queens like Astoria, Long Island City, and Sunnyside. Queens has traditionally been known as a submarket that sees relatively few multifamily buildings change hands. Given all of the positive activity throughout the borough, many owners chose to hold off selling in 2014 as the borough continues to appreciate.

The multifamily transactions included in the analysis occurred at a minimum sales price of $1 million, with a minimum gross area of 5,000 square feet, and with a minimum of 10 units. Public records were used to compile the report figures, which were reported by ACRIS and other sources deemed reliable.