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.
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 email@example.com. For a copy of the report, please see http://arielpa.com/report/report-MFMIR-Mar-2015.
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.