New York City multifamily sales grew in the 2Q of 2015, building on the momentum of the strong figures seen during the 1Q15 and showing significant year-over-year gains, according to Ariel Property Advisor’s Multifamily Quarter in Review New York City: Q2 2015.
For the 2Q15, New York City saw 225 transactions comprised of 364 buildings totaling $3.30 billion in gross consideration. This represents a 74 percent increase in dollar volume, a 33 percent increase in transaction volume and a 12 percent increase in property volume compared to 2Q14, which saw 325 properties trade across 169 transactions totaling $1.901 billion in gross consideration.
Figures remained relatively flat compared to the 1Q15, which was an exceptional kickoff to 2015. Pricing throughout the city continues to escalate by most measures, as seen in the 6-month trailing average, which shows gross rent multiples increasing by 1.4 year-over-year and the average price per square foot in Manhattan have eclipsed $900 per square foot. Compared to last year, average capitalization rates were down 60 basis points in The Bronx and were down marginally in Manhattan, Brooklyn and Northern Manhattan.
“New York City multifamily sales have had an incredible first half and we expect this momentum will carry through to the end of the year, from both a transactional and pricing perspective,” said Shimon Shkury, President of Ariel Property Advisors. “As owners and buyers anticipate rising interest rates later this year, many are eager to do deals now to lock in current rates.”
The following is a breakdown of the multifamily market in 2Q15 by submarket:
Brooklyn. Institutional caliber multifamily deals had a big 2Q in Brooklyn as the borough saw 6 transactions trade for more than $35 million-two of which surpassed $150 million each. Leading the way was Kushner Companies and LIVWRK, who purchased 184 Kent Avenue, a 374,274 square foot luxury rental building, for $275 million, or $792 per square foot. The partnership plans to convert the building to condominiums, following a trend more commonly seen in large Manhattan multifamily trades. In Crown Heights, a 200-unit elevatored building at 805 Saint Marks Avenue exchanged hands for $44 million – double what the seller paid for the property in 2013 and highlighting the neighborhood’s rapid appreciation.
Manhattan. Manhattan continues to attract investors from all over the world, as both institutional funds and small investors alike look to take advantage of the sub-market’s safe-haven. Akelius Real Estate Management, the U.S. branch of a Swedish investment firm, made a large splash this quarter with the $167.5 million dollar purchase of 362-372 Second Avenue, a 211-unit elevatored building in Gramercy. The property last traded hands in the 1940s and sold for just north of $900 per square foot. In the East Village, an 80/20 program building constructed in 1997 sold for $60 million, or $654 per square foot.
Northern Manhattan. Although transaction, building and unit volume were down year-over-year, Northern Manhattan’s dollar volume jumped 24 percent compared to the 2Q14 as pricing in the sub-market has heated up and more single-asset trades occurred. One highlight was the sale of 1501 Lexington Avenue at the border of East Harlem and Carnegie Hill, just one block north of the 96th Street subway stop. The 161 mixed-use elevatored building sold for $92 million, which translates to approximately to $690 per square foot. In Hamilton Heights, 3621-3629 Broadway, a 65,050 square foot mixed-use building sold for $25.5 million, or $392 per square foot.
Bronx. The Bronx had a very strong quarter, experiencing gains in both quarter-to-quarter and year-over-year figures. The borough saw 79 buildings trade across 52 transactions totaling $420.861 million in gross consideration, which equates to a 73 percent increase in dollar volume, a 30 percent increase in building volume and a 24 percent increase in transaction volume compared to 2Q14. The borough’s largest trade for the quarter took place at 1749 Grand Concourse, a 423,500 square foot elevatored building, which sold for $49.5 million, or $178,000 per unit. The sale marked the third time the asset has traded since 2010.
Queens. Two large multifamily transactions pushed Queens dollar volume up on a quarter-to-quarter and year-over-year basis. The borough’s largest transaction took place in southern Astoria, where a pair of elevatored buildings located at 11-15 Broadway and 30-50 21st Street sold for $72 million, which is 20% above the price paid for the same assets in 2013. In Sunnyside, 43-31 45th Street, a 79,830 square foot mixed-use elevatored building, sold for $27.5 million, or $344 per square foot. Nearly all other transactions during the quarter were under $5 million, which somewhat explains the light number of units sold.
*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-MFQIR-Q2-2015
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