Ariel: January NYC M-F Sales Show Strong Start to 2014
- Mar 17, 2014
Multi-family transactions continue to dominate the scene in the Big Apple on a grand scale.
The breakdown in January includes 58 transactions in New York City comprised of 93 buildings totaling $707.3 million in gross consideration, compared to January 2013, which saw 33 transactions made up of 70 buildings totaling $341 million in gross consideration.
Although January multi-family sales declined compared to the prior month of December–down 28 percent in transaction volume and 44 percent in dollar volume–the trend is a somewhat regular occurrence at the beginning of the year, since several deals are pushed to close in December for tax reasons, according to the report.
“At the end of 2012, we had an abnormal year, where we’ve seen a lot of sales happening right before the end of the year because of tax changes, the capital gains tax change in 2013,” Shimon Shkury, president of Ariel Property Advisors
explained to Commercial Property Executive. “A lot of of people that considered selling in 2013 said they’d rather close now, in 2012. That created a scenario where a lot of sales took place in December 2012, therefore a lot of the sales that would have happened in January/February were delayed, because they happened before, it was abnormal; that’s part of the reason why we’re seeing this increase.”
Nevertheless, Shkury contends that 2014 will continue be a robust year with even more transaction activity coming within multi-family portfolios, because of simple supply-and-demand microeconomics.
“There’s been a lot of new residents coming to New York City and not enough construction, which helps the rental market and clearly the interest-rate environment is definitely helping,” he added.
The breakdown of the January 2014 multi-family data by submarket is as follows:
- Brooklyn was the most active in terms of transactions, development and dollar volume with 22 sales across 4o buildings. The borough also showed positive gains month over month in dollar and development volume. Multi-family sales in Brooklyn totaled $240 million in gross consideration, largely of which came from a four-building portfolio in Brighton Beach that traded for $70 million.
- Manhattan trailed just behind Brooklyn in the month of January in terms of dollar volume, $236 million in gross consideration over 11 transactions and 14 buildings. A single building that sold at 15 Cliff St. in the Financial District netted $95 million, which translates to just under $600 per foot. Also of note in Manhattan, the average cap rate for the six months ended in January fell to 3.9 percent, which is the first time the six-month average has fallen below 4 percent.
- The Bronx realized hugs increases over a lackluster January 2013, with dollar amount totaling $158 million across 14 transactions and 22 buildings. A family-owned portfolio sold for $156 p/ foot, or more than $52 million in total.
- Northern Manhattan saw eight sales take place, a slight increase both month over month and year over year, but only $55 million in dollar volume. Of the trades in the area, one stood out at 416 E. 120th St., a new construction rental building that sold for more than $400 per foot.
- Queens had a relatively light month, with seven buildings trading at a total of $18.2 million. Pricing, however, remained strong on a long-term basis, with similar metrics to Northern Manhattan and Brooklyn.
For the six months ended in January 2014, the average monthly transaction volume dropped slightly to 64 transactions per month. The six-month average dollar volume also fell slightly to $852 million.
The multi-family 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.
“We’ll definitely see increases in pricing over time, we’ll definitely see more transaction volume in 2014,” Shkury concluded.