The number of multifamily buildings sold in New York City in February 2014 jumped 59 percent and the dollar volume of those trades soared 186 percent compared to February 2013, according to Ariel Property Advisors’ Multifamily Month in Review for February.
February saw 97 multifamily buildings sell over 40 transactions for a total value of $679.96 million, compared to 32 multifamily transactions comprised of 61 buildings totaling $237.7 million in gross consideration in February 2013.
“New York City multifamily sales showed large year-over-year growth in February, continuing the impressive trend we saw at the start of the year,” said Shimon Shkury, president of Ariel Property Advisors. “Tight inventory, robust buyer demand, and inexpensive financing continued to steadily push prices upward.”
Month-to-month, the number of buildings sold increased a slight 2 percent and the dollar volume of the deals declined a modest 6 percent compared in February compared to January, which saw 95 buildings trade with a total dollar volume of $721 million.
The following is a breakdown of the February 2014 multifamily data by submarket:
Brooklyn was the most active in terms of transactions and building volume with 52 buildings trading across 18 sales, for a total of $343.5 million in gross consideration. Month-to-month building and dollar volume rose 30 percent and 43 percent, respectively, from January, and the borough’s activity greatly surpassed the activity of a year ago when there were nine transactions totaling $27.98 million. A significant chunk of that volume was accounted for by the sale of a multifamily portfolio by the Brooklyn Law School in Brooklyn Heights, and a 28-building package mostly in Crown Heights and Prospect Park South.
Manhattan’s dollar volume totaled $157.798 million in gross consideration across just six transactions and seven buildings. Transaction volume was flat year-over-year but dollar volume was propped up by the sale of The Grayson at 247 East 28th Street for just under $100 million, nearly double the $53 million paid for the same asset in 2012. At over $900 per foot, and reportedly under a 4.5 percent cap rate, this stands out as a significant market bellwether.
The Bronx saw steady sales on a month-to-month basis, but made huge leaps on a year-over-year basis. The borough saw 27 buildings trade for a total of $129.555 million, figures three times and five times greater than a year ago, respectively. A row of multifamily properties on Haviland Avenue accounted for eight of these buildings, averaging $105 per square foot, and $97,000 per unit.
Northern Manhattan was the one exception to the rule this month, showing declines both month-to-month and year-over-year with $37.575 million in gross consideration across four buildings. Pricing, however, is as strong as ever. Each transaction this month occurred at over $220 per square foot, continuing the pricing climb. The average price per foot in Northern Manhattan has been $237 over the last six months, compared to $174 a year ago.
Queens had a relatively light month, with just four transactions totaling $11.505 million. Despite the slow market, pricing remains strong for the borough, with cap rates around 5 percent along with prices per foot and prices per unit on par with metrics in Northern Manhattan and Brooklyn.
Trailing 6-Month Sales Averages: For the six months ended in February 2014, average monthly transaction volume dropped slightly to 60 transactions per month, but the six-month average dollar volume increased to $885 million.
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 firstname.lastname@example.org. For a copy of the report, please see http://arielpa.com/newsroom/report-MFMIR-Feb-2014.
New York City gained 76,400 private sector jobs from March 2013 to March 2014, but the unemployment rate ticked up slightly to from 7.9 percent in February to 8 percent in March, according to the State Labor Department. New York State gained 108,200 private sector jobs during the same period and the state’s unemployment rate rose modestly from 6.8 percent in February to 6.9 percent in March. Year-over-year statewide, 41,200 jobs were created in educational and health services and 24,400 jobs were created in professional and business services, but 5,200 manufacturing jobs and 4,600 government jobs were lost.
Economic activity in the Federal Reserve’s New York district has rebounded since February, according to the Fed’s Beige Book. Demand for labor strengthened in all sectors, with hiring increasing in the financial sector. In addition, many businesses surveyed are planning to hire new workers, particularly in the service sector. New college grads are finding jobs in New York City and skilled workers, particularly in IT, are scarce. Banks reported demand for commercial mortgages, but lower demand for residential mortgages.
U.S. mortgage lending fell to $226 billion in the first quarter, which is the lowest level for a quarter since 1997, and less than one-third the 2006 average, according to the Mortgage Bankers Association. The decline in mortgage loans was attributed to rising home prices and interest rates that have been increasing since mid-2013. Also, more than 40 percent of home purchases are now all-cash deals.
Fewer 25- to 44-year-olds are living in Westchester, Nassau, and Suffolk counties because more young people are opting to remain in New York City rather than return to their suburban roots, according to the NY Times. Some housing experts theorize that young people are being pushed out by the lack of affordable housing in the suburbs, while others say the trend is part of the re-urbanization that many cities are experiencing and that young people are staying in New York City because it’s safe, diverse, energetic, and close to local amenities.
The Brooklyn neighborhood of South Williamsburg, bordered by Grand Street, Union Avenue, the East River, and Division Avenue, is becoming as popular as North Williamsburg, according to a NY Times profile of the area. Warehouses have been converted into housing with the largest conversion, the Domino Sugar redevelopment on Kent Avenue, on the horizon. About 90 percent of the housing stock is rental, but condo projects are on the rise including the Oosten, a 216-condo development scheduled to open in 2016 on the former Schaefer beer plant site at Wythe Avenue and South Eighth Street.
Luxury developments along the Queens waterfront are challenging the borough’s working class image as depicted in two popular television shows — All in the Family and The King of Queens, according to a NY Times article. A two-bedroom penthouse at Five 27, a luxury development in Long Island City, recently sold for a record $1.58 million, and at the View at Hunters Point, a 1,842-square-foot condo is on the market for $3.58 million and a 2,100-square-foot, three-bedroom condo is listed for $5.388 million. Medium condo prices in Queens increased 17 percent in the first quarter of 2014 compared to the same quarter last year.
Work has been completed on the exterior of a former elementary school at 213 E. 99th Street in East Harlem that developers Artspace and El Barrio’s Operation Fightback are converting into a 90-unit affordable housing complex, according to the WSJ. The developers broke ground in 2012 on the $52.2 million rehab of the building, which was designed in 1898. Artspace has 35 similar projects with more than 1,100 residential units nationwide. The organization selects income-qualified artists and local residents, allowing them to live in their affordable units in perpetuity.
The owner of The Bronx Borough Courthouse at 161st Street and 3rd Avenue, which has been vacant since 1977, is seeking a tenant such as a charter school or community group, the Daily News reports. Built between 1905 and 1914, the Beaux Arts-style building features 25-foot-tall ceilings, terrazzo floors, and spiral staircases. Owner Henry Weinstein has invested $5 million in electrical, plumbing, and elevator repairs in the 82,000-square-foot landmarked structure.