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Strong March Bolsters 1Q NYC Multifamily Figures

Recording the third highest monthly dollar volume total over the past 12 months, New York City multifamily sales experienced a remarkable transaction and dollar volume in March. These figures confirm the strong uptick in sales seen in 1Q15 multifamily reports, according to Ariel Property Advisors’ Multifamily Month in Review: New York City for March 2015.

Multifamily Month In Review

The gains in March are a significant turnaround from lackluster figures seen during the first two months of the year. In March, New York City saw 89 transactions comprised of 170 buildings totaling $1.799 billion in gross consideration. This represents a 162% increase in dollar volume, a 100% increase in building volume and a 48% increase in transaction volume compared to February 2015, which saw 60 transactions comprised of 85 buildings totaling $685.569 million in gross consideration.

“March numbers suggest growing economic strength is boosting investor confidence, and is consequently having a positive effect on multifamily asset prices and sales volume,” said Shimon Shkury, president of Ariel Property Advisors.

The following is a breakdown of the March 2015 volume by submarket:

Brooklyn played a huge role in March’s success, as the submarket was the most transactional and also led the way in terms of dollar volume with 58 buildings trading across 27 transactions totaling $683.094 million in gross consideration – roughly the entire city’s dollar volume for February 2015. Urban American unloaded their Kings Portfolio for $236 million – a 17-building, 1,434-unit portfolio located primarily in South and East Brooklyn – which translates to $156 per square foot. Another large portfolio consisting of 11 properties concentrated mainly in Flatbush and Brighton Beach exchanged hands for $206.5 million, or $236 per square foot.

Manhattan had a strong month as it experienced 19 transactions consisting of 40 buildings totaling $605.886 million in gross consideration. Thor Equities continued to make a push into the New York residential market as it purchased a 245-unit rental building with a condo conversion possible in the future located at 30 Park Avenue in Murray Hill for $179 million, or $757 per square foot. In Hell’s Kitchen, a 79,000 luxury rental building located at 311 West 50th Street sold for $72 million, which translates to $888 per square foot.

The Bronx saw a flurry of large, single building trades that helped spike dollar volume 111% year-over- year. In Castle Hill, 2001 Story Avenue – a 355-unit elevatored building – sold for $66 million and, reportedly, a 5.5% cap rate. On the Grand Concourse, the Morgan Group sold a 172,032 square foot building for $25.6 million which translates to $148 per square foot. Pricing across all metrics continue to show strength in the Bronx.

Northern Manhattan also saw a jump in dollar volume year-over-year as March totaled $223.714 million in gross consideration, a 50% increase from March 2014 figures. A pair of elevatored mixed use buildings at 4101 & 4113 Broadway totaling 126,000 square feet in Washington Heights sold for $42 million, or $333 per square foot.

Queens saw 9 buildings trade across 6 transactions totaling $30.247 million in gross consideration. In Astoria, a pair of mixed use buildings consisting of 10 units on Astoria Boulevard sold for $4.132 million, which equates to $404 per square foot. The neighborhood of Auburndale saw the month’s largest trade, as a small portfolio of 50 units sold for $11.2 million or $204 per square foot.

For the six months ended March 2015, the average monthly transaction volume increased to 68 transactions per month. The average monthly dollar volume also decreased slightly to $1.221 billion.

*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.

More information is available from Mr. Shkury at 212-544-9500, ext. 11, or sshkury@arielpa.com. For a copy of the report, please see http://arielpa.com/report/report-MFMIR-Mar-2015.

Our Observations For the Week

On Thursday, the Department of Buildings (DOB) issued a press release outlining its plan to reform the agency over the next four years, including a $120 million infusion and 320 new positions. Commissioner Rick Chandler stated that the staffing and budget commitments will allow the agency to run not only more efficiently, but also with more transparency. Highlights include the addition of a risk management office and a separate affordable housing processing office. The DOB’s plan to reform comes several months after 16 employees were arrested for fraud and bribery following an investigation of DOB and the New York City Department of Housing Preservation and Development.

Fannie Mae and Freddie Mac are in the process of cutting back on market rate multifamily lending, as both are on pace to surpass their annual production caps in the third quarter, National Real Estate Investor reports. Both agencies increased their rates in the past few weeks and have imposed more stringent underwriting policies, which will likely prompt an uptick in interest in CMBS, commercial bank and life insurance lending. The Federal Housing Finance Agency introduced the production caps in 2013 in an attempt to increase private capital in the marketplace.

As the current 421a tax benefit program approaches its expiration on June 15th, Mayor deBlasio has submitted a new proposal that aims to benefit both landlords and the Mayor’s extensive affordable housing plan, Capital reports. The proposal would permit landlords who qualified for 421a tax benefits prior to 2008 to continue receiving those benefits for an additional 15 years, pending the landlords designate an additional 5% of their building’s units as affordable. This extension would encourage landlords to continue to participate in the 80/20 program, with their benefits about to otherwise expire, and the Mayor’s administration will add affordable volume and longevity.

The City Council approved a bill on Thursday that will place a two-year moratorium on owners and developers who wish to convert hotels to residential condominiums, Capital reports. The bill – one of six passed on Thursday – received opposition from several individuals who believed it was too severe as neighborhoods throughout the city may no longer have a need for hotels in the near future. Additionally, the bill calls for a study that will investigate the effects hotel-to-condo conversions have on New York City’s economy.

Pershing Square Capital Management founder and billionaire Bill Ackman is under contract to buy 787 11th Avenue from Ford Motor Company, the New York Post reports. The 464,000 square foot property, located between West 54th and West 55th Streets, is currently used for autoshows and a service center. Although an official sale price has not been made public, reports indicate the building could fetch up to $230 million. It has been rumored that Pershing Square could re-locate to a new space in the property while leasing out the remainder of the building.

Gary Barnett’s Extell Development is aiming to crush the most expensive sale of a single tower with its newest project, the Nordstrom Tower, reports the Wall Street Journal. The project, which is located at 57th Street and Broadway, is hoping to produce a total sellout of $4.4 billion when completed – $4 billion from condos and $400 million from the sale of the ground-floor to Nordstrom. Should the tower hit its expected milestone, it would easily eclipse the $2.8 billion sale of the GM building to Boston Properties in 2008.

U.S. Economy Adds 223,000 Jobs, Unemployment Rate Declines to 5.4%

This week we are highlighting the most recent jobs report, the mayor’s plans to alter the 421a tax program, and the New York City Water Board’s water rate increase.

April saw the national unemployment rate fall to 5.4%, down from 5.5% in March, as the U.S. economy added 223,000 jobs, The Wall Street Journal reports. A combination of factors including harsh winter weather, labor strikes at West Coast ports and a strong dollar led to weak growth during the first quarter of the year and the slowdown is now being viewed as temporary after April’s reassuring numbers. The unemployment rate is shifting towards the Federal Reserve’s expectation of full employment between 5 and 5.2 percent.

Mayor deBlasio proposed significant changes to the current 421a tax incentive program, which expires June 15th, and will call for developers to set aside 25 to 30 percent of their projects for affordable housing, the New York Times reports. The mayor’s proposal is the latest in an effort to create and preserve 200,000 units over the next 10 years and has garnered support from the Real Estate Board of New York, the industry’s most influential lobbying group. In addition to altering city tax incentives, deBlasio has also called for a “mansion tax,” which would employ an additional 1 percent tax on home sales over $1.75 million. Together, the mayor hopes the two initiatives will produce over 60,000 affordable homes.

The New York City Water Board held its annual meeting on May 8th and announced its plans to increase the water and waste water charges rate by 2.97 percent. The resolution came after holding public hearings the week of April 27th, and the increase will take effect on July 1st, 2015. The price of 100 cubic feet of water will jump from $3.70 to $3.81, while a freeze will be placed on the minimum charge for meter-billed customers at $0.49 per day for water, plus a wastewater charge of 159 percent of regular water charges.

Developers are looking to the peripheral neighborhoods of the city’s outer boroughs for opportunity, Bloomberg reports. Rising land costs and compressing cap rates have pushed Manhattan investors to search for value elsewhere in the city. AvalonBay Communities, the country’s second-largest publicly traded landlord, is teaming up with Muss Development to build a 200-unit rental in Sheepshead Bay, for example – a 45 minute train ride from Manhattan. There are currently 54,595 residential units planned for Brooklyn and Queens outside the core neighborhoods of DUMBO, Williamsburg, Long Island City and Astoria, which surpasses the 44,427 units currently in the Manhattan pipeline.

The Lower East Side’s development pipeline has slowly been building, and now it appears the residential market has taken off as condo units have surpassed the $2,000 per square foot barrier, The Real Deal discusses. Buildings such as Adam America’s 100 Norfolk and DHA Capital’s 50 Clinton Street currently both have in-contract units that are blending to over $2,000 per square foot. A 2008 neighborhood rezoning has helped enable larger-scale development in the area. A few years ago, developers like DHA Capital saw a lack of smaller, “efficient” units available anywhere else in the market, and the current demand for such units are now paying off.

TIAA-CREF broke a Brooklyn borough record the past week when it bought 250 North 10th Street in Williamsburg for $169 million from a partnership between LCOR and the California State Teachers Retirement System (CalSTRS), Crain’s reports. The luxury building, located just south of McCarren Park, consists of 234 units and was originally developed by the Rabsky Group in 2011. LCOR and CalSTRS had originally planned to hold on to the building for seven years, but with prices rising in Williamsburg, the partnership decided to sell sooner rather than later.

Kushner Companies, in tandem with LIVWRK and the Rockpoint Group, is planning a condo conversion at 184 Kent Avenue in East Williamsburg, The Real Deal reports. After paying $275 million for the rental building in April, Kushner filed plans that will have a total sellout value of around $415 million. The building is currently asking $3,000 for studios, $3,400 for one-bedrooms and $3,800 for two-bedrooms. This is the third time that Kushner has teamed up with Asher Abehsera’s LIVWRK, having already worked on large-scale projects in DUMBO and Gowanus.

NYC Multifamily Dollar Volume Rises To $3.324 Billion In The First Quarter

First quarter New York City multifamily dollar volume rose 6 percent year-over-year to $3.324 billion, with Manhattan and Brooklyn each accounting for more than $1 billion in sales, according to Ariel Property Advisors’ Multifamily Quarter in Review New York City: Q1 2015.

Multifamily Quarter In Review

After a sluggish January and February, the NYC Multifamily sales market gathered significant steam in March. In all, the quarter was on par with the robust fourth quarter of 2014, totaling over $3 billion in sales. Activity was strong across all regions, with Brooklyn in particular standing out for its strong dollar volume.

For the 1Q15, New York City saw 208 transactions comprised of 338 buildings totaling $3.324 billion in gross consideration. This represents a 7% increase in transaction volume, a 13% decrease in building volume and a 6% increase in dollar volume compared to 1Q14, which saw 194 transactions comprised of 387 buildings totaling $3.130 billion in gross consideration.

Pricing continued to advance year-over-year, as the average Manhattan price per square foot approaches $900, and cap rates in Northern Manhattan, Brooklyn, and Queens sit below 5%, with Manhattan below 4%. On a more general level, the median multifamily sales price across all of NYC for the last six months was $6.4 million, compared to $5.4 million in the same 6-month period a year ago.

The following is a breakdown of the first quarter 2015 volume by submarket:

Manhattan: While Manhattan’s fourth quarter was buoyed by a handful of large sales, this past quarter was on par in terms of transaction activity, and easily surpassed the activity seen in the first quarter a year ago. For the quarter, the borough saw 42 trades across 69 buildings, totaling $1.333 billion in gross consideration, a 24%, 44%, and 9% increase over last year’s totals, respectively. One of the notable sales was a 5-building package that sold for over $1,500 per foot in NoLiTa on Elizabeth Street, one of the city’s most quickly appreciating areas.

Brooklyn: Two massive Brooklyn portfolios in East Flatbush and Brighton Beach drove the borough’s strong quarter, which saw 114 buildings trade, among 63 transactions and $1.079 billion in dollar volume. Dollar volume for the quarter almost doubled that of the 4Q14, and was 48% higher than the first quarter of last year. In Crown Heights, 494 Sterling Place sold for almost $800 per foot, and over $600,000 per unit.

Northern Manhattan: Northern Manhattan was relatively stable quarter-to-quarter, with a strong uptick year-over-year. For the quarter, the borough saw 34 trades across 50 buildings and just over $400 million in gross consideration. Compared to last year, these figures were up 21%, 22%, and 53%, respectively. Multifamily price per foot surpassed $300 in the region this quarter, an all-time high. A sign of the region’s potential, two mixed-use buildings on 125th and Broadway closed for $533 per square foot.

The Bronx: The first quarter brought mixed results for The Bronx, showing strong transaction and dollar volume compared to last quarter, but down from a big 1Q2014. The borough in total saw 49 sales across 69 buildings, and $340.240 million in gross consideration. Pricing in the borough continues to climb, reaching $135 per square foot in the last six months. The largest sale in the borough took place at 2001 Story Avenue in Castle Hill, for $66 million, or $156 per foot.

Queens: Queens made a fair amount of noise this quarter, despite paling in comparison to the first quarter of 2014. The 20 transactions, 37 buildings, and $169.237 million in gross consideration which traded represent quarter-to-quarter increases of 54%, 76%, and 21%, respectively. An Astoria portfolio purchased by Kushner Companies in January was the largest sale of the quarter, at $51 million, or $401 per square foot.

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.

More information is available from Mr. Shkury at 212-544-9500, ext. 11, or sshkury@arielpa.com. For a copy of the report, please see http://arielpa.com/newsroom/report-MFQIR-Q1-2015.

Our Observations For the Week

On Wednesday, the New York City Rent Guidelines Board’s nine-member panel voted on proposed guidelines for rent stabilized apartments renewing between 10/1/15 and 9/30/16. The panel, which represents both tenants and landlords, voted for a range of 0%-2% increases on one-year renewal leases and .5%-3.5% on two-year renewal leases. This year’s vote marked the first time the entire panel consisted of members appointed by Mayor deBlasio, who called for a rent freeze in 2014.

Although New York City residential construction spending increased 73% and hit an all-time high in 2014 at $11.9 billion – the first time the number has ever exceeded $7 billion – the number of new housing units only increased 11% to 20,329, Bloomberg reports. These numbers suggest that spending on luxury and high-end homes have reached new heights, and the skewed spending is a direct contradiction to Mayor deBlasio’s plan to build more affordable units throughout the city.

“Home prices continue to rise and outpace both inflation and wage gains,” according to David M. Blitzer, Managing Director and Chairman of Index Committee at S&P Dow Jones Indicies. As reported in the latest Case-Shiller 20-city Composite, February experienced the highest month-to-month home price increase since July 2014, rising 0.5% from January. Annually, Denver & San Francisco saw the highest increases (10% and 9.8%, respectively), while Washington & Cleveland saw the lowest (1.4% and 2.3%).

Large corporations are choosing to establish their tech divisions in some of Manhattan’s most sought-after neighborhoods – outside of their headquarters, the Wall Street Journal reports. In order to attract top tech talent, businesses are realizing they need to cater to young millennials and position themselves in a way that will not only attract, but retain talent. Serving as examples, MasterCard and Capital One have moved their tech divisions to Union Square, while Barclays is bringing their financial technology division to Flatiron.

After stints heading the Metropolitan Transit Authority and Hong Kong’s transit system, Jay Walder, CEO of Motivate, is on a mission to turn around CitiBike, Crain’s reports. The program has been plagued by poor bike & station maintenance and glitch software, which has led to a decline in revenues. Aside from Walder’s plan to update technology and add a new fleet of bikes, the program is set to expand by 20% by the end of 2015.

Several affordable housing groups have backed NYU in its plan to expand into Greenwich Village, DNAinfo reports. Three groups filed a legal brief defending a recent Appellate Division ruling in favor of NYU’s expansion and cited the possibility of a threatening precedent should the Court of Appeals rule against NYU based on the argument that the expansion would be built on a public green space without permission. Although the parcels at hand were never officially zoned as parks, residents argue the parks should be protected because the community has used them for decades.

New York City Subway Ridership Highest in 65 Years

This week we’re highlighting the jump in subway ridership and plans for an expanded ferry service, the increase in tech jobs, and other trends in the real estate industry.

More than 1.75 billion people rode the subway in 2014, a 2.6 percent annual increase and the highest level since the post-World War II boom more than 65 years ago, according to the MTA. There were 5.6 million riders on an average weekday, and 6 million riders on an average weekend last year. The L line in Brooklyn saw average weekday ridership rise by 5,600 customers, a 4.7 percent increase. On an average weekday on the L line, the Bedford Avenue station in Williamsburg had 27,224 riders, more than any other station on the L, and ridership increased by 11.5 percent at the Bushwick Avenue-Aberdeen station, by 9.9 percent at the Wilson Avenue station, and 9.3 percent on the Jefferson Street station. Ridership on the M line was up 6.2 percent at the stations between Marcy and Metropolitan Avenues; in Queens, at the Vernon-Jackson Avenue 7 station, weekly ridership grew by 12 percent or 1,500 customers a day, and at the Court Square E, G, M, and 7 station ridership rose by 9.7 percent or 2,000 customers. In the Bronx, the 2 and 5 lines grew by 3.7 percent or nearly 4,800 riders a day, and the Lenox Avenue 2 and 3 lines in Harlem increased by 3.7 percent, or more than 2,100 customers a day.

The NYC Economic Development Corporation has issued an RFP for an operator to expand the existing East River ferry routes and provide service to new landings in Astoria and the Rockaways in Queens, South Brooklyn, the Lower East Side, and the Soundview section of the Bronx. The Citywide Ferry Service will build on the success of the existing East River Ferry, and support growth across the city by improving the infrastructure. Following the large-scale roll out of expanded service in 2017 and 2018, the city will revisit other route options, such as a route to Stapleton and Coney Island. Since its inception as a pilot program in 2011, East River Ferry service has exceeded initial ridership projections, hitting its total three-year ridership goal of 1.2 million in its first 18 months of service, and continuing to grow in popularity since. To date, over 4.3 million passengers have taken trips on the East River Ferry.

Between March 2014 and March 2015, companies like Google, Yahoo, and LinkedIn helped New York City gain more than 5,000 tech jobs, a 9.2 percent year-over-year jump, Crain’s reports. The tech sector, which has grown from 37,000 jobs in 2006 to 67,400 jobs in 2015, was the fastest growing industry in the city last year behind construction, arts and sports, and home services. Tech employees are among the city’s highest paid workers with average salaries second only to Wall Street.

More than 88,000 people have applied for 55 affordable units at Extell Development Company’s building at 470 West 62nd Street on the Upper West Side, the NY Times reports. Applicants with household incomes of $30,240 to $50,340 are eligible for the apartments that will rent for $1,082 for a two-bedroom, $895 for a one-bedroom, and $833 for a studio. The city will begin screening applicants next month, the top applications will be reviewed, about 2,000 interviews will the conducted, and 55 households will be selected to move in beginning in August. The project has been criticized because Extell designed an entrance for the lower-cost units that was separate from the high-priced condo building, which is subsidizing the cost of the affordable apartments. So far 219 luxury condos have sold at 50 Riverside Boulevard, with some going for as much as $25 million. Extell’s Gary Barnett said the demand for the affordable units shows that the so-called poor door issue was a “made-up controversy.”

Private equity firms with real estate funds of more than $1 billion accounted for 64 percent of all the capital raised so far this year, while midsize funds between $500 million and $1 billion accounted for 17 percent, the WSJ reports. The shift reflects that pension funds, endowments, and other large institutional investors are seeking higher returns by putting more cash into a core group of larger, high-performing funds. Blackstone Group LP raised $14.5 billion for its recent fund, Starwood Capital Group raised $5.6 billion, and Lone Star Funds raised $5.5 billion. Global closed-end funds have more than doubled from $46.8 billion in 2010 to $97.7 billion in 2014, but are still below the 2008 peak of $137.5 billion.

Four New York City firms have been named to Affordable Housing Finance’s list of Top 50 Affordable Housing Developers of 2014. The firms include Dunn Development Corp., No. 19 with 358 starts and 221 completions; L+M Development Partners, No. 26 with 239 starts and 553 completions; Omni New York, No. 35 with 176 starts; and the Arker Cos, No. 41 with 156 starts and 65 completions.

City Council Speaker Melissa Mark-Viverito’s office is considering legislation that would decriminalize public consumption of alcohol, public urination, bicycling on the sidewalk, being in a park after dark, failure to obey a park sign, littering, and unreasonable noise, making them civil charges like a parking ticket instead, the Daily News reports. Tickets would be issued for an appearance in one of the administrative courts but police officers could not make arrests. Police Commissioner Bill Bratton has previously said he didn’t support civil summonses for quality of life violations because he thought they would be ignored. The police commissioner has argued that that the broken windows policing, which focuses on quality of life violations, contributes to a safer city and helps deter serious crime.

City officials celebrated the grand opening of the Morris Court Apartments, two connected six-story buildings with 201 affordable units at 253 East 142nd Street and 250 East 144th Street in the Mott Haven section of the Bronx, Multi-Housing News reports. Residents will include families earning up to 60 percent and 80 percent of the Area Median Income as well as formerly homeless individuals and families. Morris Court is the first completed affordable housing project made possible by the 2009 Lower Concourse Rezoning, which allowed housing development in the area, which was formerly zoned for industrial use and included a mix of four to 12 story loft buildings and lower-rise industrial and automotive properties.

Long Island City condo prices averaged $1,000 per square foot in the first quarter with the highest price reaching $1,153 per square foot, according to Modern Spaces’ LIC and Astoria Report. The average price of a one bedroom in Long Island City is above $800,000 and the average price of a two bedroom is above $1.1 million. As the supply of rental apartments in Long Island City increases, prices are leveling out with luxury rentals averaging $52 per square foot and $4,029; walk-ups averaging $42 per square foot and $2,458; and elevator rentals averaging $43 per square foot and $2,963.

Only 10,243 Manhattan apartments were available for sale in the first quarter, a record low, and inventory remains tight, StreetEasy reports. Although inventory generally increases slightly in the first quarter of the year from the previous quarter, this year the supply was 0.6 percent less than last quarter and 2.3 percent lower than the first quarter last year. Year-over-year, sales volume for condos and co-ops rose 2.6 percent, and the median sales price increased 5.2 percent year-over-year to $946,000.

New York City Multifamily Trading Light In February

New York City multifamily trading was light in February compared to the previous month and the previous year, but preliminary figures for March are strong and the first quarter volume should be in line with last year’s activity, according to Ariel Property Advisors’ Multifamily Month in Review for February.

Multifamily Month In Review

In February 2015, New York City saw 56 transactions comprised of 83 buildings totaling $580.822 million in gross consideration, this represents a 19 percent decrease in transactions, a 13 percent decrease in the number of buildings traded, and a 25 percent decrease in dollar volume, compared to the previous month, which saw 69 transactions, 95 buildings trade, and dollar volume of $778.596 million. February activity also fell below February 2014, which saw 54 transactions, 152 buildings trade, and dollar volume of over $1 billion.

“The lack of large, institutional level multifamily deals in February resulted in a decline in dollar volume during the month,” said Shimon Shkury, president of Ariel Property Advisors. “However, since we’ve already seen several nine-figure multifamily portfolio sales in March, we expect this pause in the market to be short-lived.”

The following is a breakdown of the February 2015 volume by submarket:

Manhattan. Manhattan saw light trading for the month with nine buildings trade across seven transactions totaling $282.8 million in gross consideration. One notable trade was a 92-unit elevatored rental building located at 330 East 63rd Street that sold for $58 million, or $721 per square foot. Following a common trend seen throughout Manhattan, the new ownership plans to convert the units to condominiums.

Brooklyn. Brooklyn saw 20 transactions comprised of 31 buildings totaling $136.258 million in gross consideration, making it February’s most transactional borough. The largest transaction took place in East Flatbush, where Clarendon Gardens, a seven-building complex totaling 195,000 square feet, sold for $33 million. The site also offers almost 24,000 square feet of additional air rights. Also of note was the sale of 142-44 Decatur Street, a 22-unit, mixed-use walk-up in Bed-Stuy, which traded for $8 million or $536 per square foot. This is double the $4 million price paid in 2013, a testament to Brooklyn’s continued growth and the seller’s successful repositioning strategy.

Queens. Queens had a relatively active month with 18 buildings trading across eight transactions totaling $63.755 million in gross consideration. Two sales demonstrate the strength of the Queens market going beyond Astoria and Long Island City. First, 71-13 60th Lane, a new construction elevatored building located in Ridgewood, sold for $21 million, or $390 per square foot. In Woodside, a 42-unit walk-up building located at 43-05 65th Street sold for $8.4 million, which translates to an impressive 3.64 percent cap rate.

Northern Manhattan. Northern Manhattan had a quiet month consisting solely of single transactions as eight buildings traded across eight transactions totaling $54.575 million in gross consideration. A mixed-use elevatored building located on the corner of 126th Street and Lexington Avenue sold for $12.6 million or $358 per square foot. Up in Hamilton Heights, a mixed-use walk-up building located at 1774-1776 Amsterdam Avenue sold for $9.95 million, or $465 per square foot.

The Bronx. The Bronx saw 13 transactions consisting of 17 buildings totaling $43.435 million in gross consideration. A mixed-use building located on the corner of Sedgwick Avenue and Fordham Road sold for $10.5 million, or $153 per square foot. In Crotona Park, a walk-up building consisting of 25 units located at 1468 Bryant Avenue sold for $3.15 million, or $190 per square foot – demonstrating the South Bronx’s hot market.

For the six months ended February 2015, the average monthly transaction volume remained steady at 66 transactions per month. The average monthly dollar volume also remained relatively steady at $1.234 billion.

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.

More information is available from Mr. Shkury at 212-544-9500, ext. 11, or sshkury@arielpa.com. For a copy of the report, please see http://arielpa.com/newsroom/report-MFMIR-Feb-2015.

Our Observations For the Week

Landmark districts have created barriers to the construction of new housing, including affordable apartments, in all five boroughs, a REBNY study concludes. The study reviewed a 10-year-period and found that less than one half of one percent of the new housing created in the city was in landmark districts. Out of the 206,819 total new housing units constructed citywide from 2003 to 2012, 17 percent, or nearly 35,000 units, were affordable. Only 0.29 percent (100 units) of the affordable units were built on landmarked properties. Of the 100 units, 95 were built in one project at Cedars/Fox Hall in the Bronx. The other five units were part of a project on Historic Front Street, built on land sold by the city. There were no new units of affordable housing constructed on landmarked properties in Brooklyn, Queens, or Staten Island.

City officials announced the launch of the Jamaica Now Action Plan, which outlines 21 strategic actions to revitalize Jamaica, Queens, and transform it into a thriving residential and commercial neighborhood. Queens Borough President Melinda Katz said, “The city cannot be clearer about our strong commitment to revitalize Jamaica’s downtown core and make it even more attractive to investors, even more livable for existing residents and businesses. It truly is one of the most strategically positioned, lowest-priced real estate left in town.”

New Yorkers are discovering Staten Island and developers are following with plans for rentals, condos, and retail stores, according to a NY Times profile of the borough. Most recently, developer BFC broke ground on the 340,000-square-foot Empire Outlets, an outlet mall and entertainment development that is scheduled to open next year in the St. George section of Staten Island. Also planned for St. George, a 630-foot-tall Ferris wheel called the New York Wheel, and Lighthouse Point, a mixed-use development on the former Lighthouse Service Depot campus. On the waterfront in the Stapleton section of Staten Island, 571 units in the first phase of a $250 million mixed-use project that will have a total of 900 rental apartments is scheduled to open this fall.

Chinese immigrants will soon overtake Dominicans as the largest foreign-born group in New York City, the NY Times reports. From 2000 to 2013, the city’s foreign-born Chinese population jumped 35 percent to 353,000, from about 262,000. During the same period the foreign-born Chinese population in Brooklyn increased 49 percent to 128,000, from 86,000. Although Sunset Park was Brooklyn’s first Chinatown, Bensonhurst with a Chinese-born population of 31,658 now has the largest number of Chinese immigrants of any neighborhood in the city. Satellite Chinatowns also can be found in the Brooklyn neighborhoods of Bay Ridge, Borough Park, Coney Island, Dyker Heights, Gravesend, Homecrest, and Marine Park.

Sites in Queens and the Bronx Targeted for State Economic Development Program

This week we’re highlighting Governor Cuomo’s announcement designating sites in Queens and the Bronx as Brownfield Opportunity Areas, the latest office and residential reports, and neighborhood news.

Governor Andrew M. Cuomo announced that areas along the Harlem River waterfront in the South Bronx, and near the rail station in Jamaica, Queens, have been designated Brownfield Opportunity Areas. The 200-acre Harlem River waterfront in the Port Morris section of the Bronx contains 10 brownfields and the goal is to redevelop the former industrial corridor for mixed-income housing and commercial development; remove environmentally hazardous substances; and increase waterfront access to the Harlem River. Mayor Bill de Blasio has pledged $200 million for infrastructure improvements in the area, which is already attracting the interest of major developers. The Jamaica Brownfield Opportunity Area consists of about 132-acres with 224 potential brownfield sites and will be targeted for mixed-use and sustainable transit-oriented development in the LIRR AirTrain Station Area. Developers, property owners, and others with projects and properties located within a designated Brownfield Opportunity Area will be eligible to access additional Brownfield Cleanup Program tax incentives and receive priority and preference for state grants to develop projects aimed at transforming dormant and blighted areas.

The Department of City Planning is reviewing changes to the city’s air rights policy that could benefit landmarked structures like St. Patrick’s Cathedral, which has an estimated 1 million square feet of air rights, the WSJ reports. The current policy only allows property owners to sell rights to developers building taller structures on or across the street, which has left St. Patrick’s few opportunities to sell air because it is surrounded by office towers. As a result, The Archdiocese of New York, Central Synagogue, and St. Bartholomew’s Episcopal Church are seeking new rules that would allow them to sell their unused air rights to developers whose properties are blocks away. Revised air rights rules were part of the proposed 2013 rezoning plan for Midtown East, which was withdrawn in the waning days of the Bloomberg administration.

For the eighth consecutive quarter, average asking rents in Manhattan office buildings increased, rising 6.3 percent year-over-year to $67.62 per square foot in the first quarter, the Real Deal reports. Referring to a research report by Colliers International, the article noted that the availability rate fell to 10.7 percent, and that lease deals signed in the quarter declined 30 percent to about 8.3 million square feet.

In the first quarter, developers filed more applications for projects in the Bedford Stuyvesant section of Brooklyn, than any other neighborhood in New York City, the Real Deal reports. The 33 proposed Bed Stuy developments include a 188-unit rental at 21 Kane Place, while other projects are planned for smaller vacant lots between existing buildings and homes. The analysis found at least 103 applications for projects with 3,311 units in Brooklyn; at least 36 applications for buildings with 2,381 units in Queens; and at least 18 applications for developments with 2,089 units in Manhattan.

Community Board 8, which includes the Brooklyn neighborhoods of Prospect Heights and northern Crown Heights, voted to request that the Department of City Planning conduct a land-use study of a six-block manufacturing district between Grand and Franklin Avenues, south of Atlantic Avenue, DNAinfo reports. The board proposes changing the zoning to allow the development of denser, affordable residential buildings up to 100 feet. Currently the district includes auto shops, storage facilities, parking lots, and junkyards.

The median sales price of a home in Brooklyn increased 17.5 percent to $610,894, and the average sales price rose 10 percent to $749,269 in the first quarter of 2015 compared to the first quarter of 2014, according to the Elliman Report: Quarterly Survey of Residential Sales for Brooklyn. Year-over-year, the number of sales fell 4.1 percent to 1,507 in the first quarter, and the listing inventory rose 5.8 percent to 4,331.

In the first quarter of 2015, the median sales price of a home in Queens jumped 20.7 percent to $446,434, and the average sales price rose 14.6 percent to $492,340 compared to the first quarter 2014, according to the Elliman Report: Quarterly Survey of Residential Sales for Queens. The number of sales declined 18.7 percent to 2,567, and the listing inventory also declined to 4,695.

The median price of a Manhattan rental apartment rose 6.1 percent to $3,395 in March compared to the previous year, while the average rental price rose 4 percent to $4,126, according to the Elliman report. Year-over-year, Manhattan’s listing inventory fell 5.6 percent in March to 5,117, and the vacancy rate rose to 2.38 percent. In Brooklyn, the median rental price declined a slight 0.2 percent to $2,893, and the average rental price declined a modest 0.7 percent to $3,231 in March compared to the previous year, and the listing inventory jumped 23.9 percent to 1,852. In Queens, the median rent rose 3.7 percent to $2,952, while the average rental price declined 3.0 percent to $2,989. The listing inventory in Queens totaled 309 in March.

The historic uptown neighborhood of Sugar Hill, which was home to prominent African-American professionals, political leaders, artists, musicians, and writers during the Harlem Renaissance, has seen an influx of newcomers since 2000, according to a NY Times profile. About 12,000 people live in the area which boasts three historic districts from 145th to 155th Streets between Edgecombe and Amsterdam Avenues. Prices for the neighborhood’s four- and five-story townhouses, prewar co-op buildings, and newer condos increased by about 15 percent to 18 percent from 2013 to 2014. Studios range from $120,000 to the low $200,000s; one-bedrooms, $150,000 to $350,000; two-bedrooms, $300,000 to $425,000; and three-plus bedrooms $450,000 to nearly $800,000. Studio rentals start at $1,350; one bedrooms start at $1,500; two-bedrooms start at $1,800; and three-bedrooms start in the low $2,000s.

New York City’s Population Growing Faster than Expected

This week we’re highlighting New York City’s growing population, the Planning Department’s revised zoning proposal, updates on new developments, the latest U.S. jobs report, and sales reports for Manhattan and Brownstone Brooklyn.

New York City welcomed 52,700 new residents in 2014 and if the population continues to grow at the same pace this year, the city will meet its 2020 estimate of 8,550,971 people nearly five years early, NY YIMBY reports. In the four years between 2010 and July 1, 2014, the census shows that the city gained 315,946 new residents, bringing the population to 8,491,079. During that same period, the Department of Buildings approved only 50,000 permits for new housing units. The fact that New York City is growing faster than expected is putting even greater pressure on the housing market.

In calendar year 2014, the Department of Housing Preservation and Development financed (built or preserved) 17,376 units of affordable housing, Capital reports. Of the units financed, 11,185 were to preserve affordable housing while 6,191 units were new construction. In the Bronx, the city financed 5,518 units (3,873 preservation and 1,645 new construction); in Brooklyn, the city financed 5,191 units (2,390 preservation and 2,801 new construction); the city financed 5,021 units in Manhattan (3,555 preservation and 1,466 new construction); and financed 1,044 units in Queens (803 preservation and 241 new construction).

Speakers at a Department of City Planning hearing on a proposal to update the city’s zoning regulations accused the de Blasio administration of being influenced by REBNY and “working to make things easier for developers while demanding too little in exchange,” DNAinfo reports. The proposed zoning changes would increase the allowed building height for senior and inclusionary housing; improve exterior and interior building design, which would raise ceiling heights to 10 feet; and reduce the parking space requirement in affordable buildings. Additional written testimony about the changes may be submitted before April 6 and the public review process is expected to begin in May.

The City Planning Commission voted to rezone the Vanderbilt corridor adjacent to Grand Central Terminal and approve SL Green Realty Corporation’s application to build a 64-story office tower at 1 Vanderbilt, the Commercial Observer reports. Planning Commission Chairman Carl Weisbrod said the approval is the first phase in the plan “to revitalize East Midtown as a world-class 21st century commercial district, attract more quality jobs to New York City, and deliver vital infrastructure improvements.” As part of the agreement, SL Green will invest $210 million in infrastructure projects, including transportation upgrades. The City Council is expected to vote on the project in May.

The Whitney Museum of American Art, which is scheduled to open on May 1 along the High Line in the Meatpacking District, is just one of the new projects transforming the neighborhood, the NY Times reports. “The district’s association estimates that 600,000 square feet of commercial space will be added within three to five years, including a hotel, retail, and office space and an expansion of the Chelsea Market,” the article said. Ground floor retail space at a new 10-story retail/office tower under development at 860 Washington Street will be leased for $600 a square foot, and Samsung has leased the entire six-story building at 837 Washington Street. Construction may begin as early as next year on Pier 55, a $130 million park and performance venue on the Hudson River at West 14th Street.

Governor Andrew Cuomo announced that the 2015-16 budget passed includes support for four new Metro-North stations in the Bronx. The cost of the new line and stations is less than $1 billion, with the State investing $250 million of that funding. The new stations at Co-op City, Morris Park, Parkchester, and Hunts Point will extend rail access to over 93,000 residents living near the stations. The project also will serve one of the largest concentrations of medical facilities in the United States at the Morris Park station.

The 18-hole Trump Golf Links at Ferry Point has opened in the Throggs Neck section of the Bronx near the Bronx-Whitestone Bridge. The 192-acre, $127 million golf course was designed by Jack Nicklaus and John Sanford “in the Scottish style-without trees,” the NY Times reports. The course will be operated by the Trump Organization, which plans to start construction on a $10 million clubhouse. An official opening ceremony is planned for May.

The U.S. economy created 126,000 jobs in March, the smallest increase since December 2013, the WSJ reports. Analysts were expecting 248,000 new jobs in March, and some attributed the lower than expected number to a variety of factors-the severe winter, a temporary blip, the plunge in oil prices, which contributed to the loss of 11,000 jobs, strong dollar, and weak global economy. Average hourly earnings in the private sector rose to $24.86, and in a separate survey, the unemployment rate was unchanged at 5.5 percent.

The median sales price of co-ops and condos in Manhattan declined by 0.2 percent to $970,000 in the first quarter of 2015 compared to the same quarter last year, while the average sales price declined by 2.3 percent to $1,732,989, according to the Elliman Report. Year-over-year, the number of sales dropped 19.5 percent to 2,661, and the average price per square foot fell 7.3 percent to $1,263. In the luxury market, the median sales price fell 10.6 percent to $5,142,162, while the average sales price dropped a slight 1.6 percent to $7,270,961. Overall, luxury sales declined by 19.6 percent to 266, and listing inventory jumped 14.1 percent to 1,575. “The Manhattan housing market took a breather after two years of robust sales and price growth,” the report states, adding that pent-up demand has largely been absorbed, and that the strengthening of the dollar may “temper” international demand.

Median sales price of all residential asset classes in Brownstone Brooklyn increased 15.2 percent to $972,000 in the first quarter of 2015 compared to the first quarter of 2014, while the average sales price increased 21.6 percent to over $1.37 million during this period, according to Ideal Properties Group First Quarter 2015 Report. Year-over-year, the average sales price jumped 19.9 percent to $2,643,259, or $892 per square foot, for one- to three-family townhouses; increased 22.5 percent to $790,360, or $909 per square foot, for co-ops; and rose 14.3 percent to $981,661, or $1,006 per square foot, for condos. Of the neighborhoods analyzed, Park Slope accounted for 22 percent of all completed sales in the first quarter, more than any other neighborhood, while Williamsburg accounted for the second highest number of sales, 16 percent.