However, that total does represent a 23% gain over the fourth quarter of '09, said Knakal, chairman of Massey Knakal Realty Services. And while the quarterly increases and decreases across the boroughs bear out Ken Krasnow's use of the word "rollercoaster," the general trend has been a steady improvement since the investment sales market for properties of $500,000 or more virtually shut down at the midpoint of last year.
The Q1 tally also masks what's been happening in Manhattan compared to the outer boroughs: a 51% gain in dollar volume since Q4, compared to a quarter-over-quarter dropoff of as much as 41% elsewhere in the city. Year over year, though, Manhattan's growth was virtually flat: a total of $1.536 billion in Q1 '09, compared to $1.539 billion in Q1 2010.
"The boroughs are a lagging indicator of what's happening in the Manhattan market," Knakal said during the media briefing at Massey Knakal's headquarters. Northern Manhattan had a quarter-over-quarter gain that was similar to that of the swath of Manhattan south of 96th Street, whlle its year-over-year upsurge of 197% in dollar volume was the best in the city, said partner Shimon Shkury. Yet the Bronx, also in Shkury's bailiwick, saw a 7% decline from Q4.
Krasnow, managing director of Massey Knakal's Brooklyn office, cited a shutdown of development activity in that borough and in Queens as a major factor in the slump in property sales on a year-over-year and quarter-over-quarter basis. However, the Q1 tallies of $143.4 million and $161.9 million for Queens and Brooklyn, respectively, did represent substantial gains over the dismal results see in Q2 '09. The firm does not track results for Staten Island.
Transaction volume citywide at 373 completed sales is still depressed by 72% from the Q1 2007 peak of 1,353 deals. With the numbers still off from the height of the market, Knakal noted that 29% of the Q1 dollar volume came from just two completed deals in Manhattan, both involving Macklowe Properties: the $305.4-million sale of a Park Avenue development site to CIM Capital and the $276.5-million sale of two multifamily properties to Equity Residential, with a third apartment tower under contract.
Nonetheless, Knakal said expectations are for dollar volume "to increase significantly this year." He said the firm is projecting annualized turnover citywide to improve from its all-time-low last year of 0.87% to 1.2%. Distress will be on the rise throughout the year, and CEO Paul Massey said incomplete development projects will be the major contributor to that pool, with either office or retail also likely to yield more distressed assets. Shkury said mortgage resets will give rise to more distress in the multifamily sector.
At the same time, Knakal said there will be more discretionary sellers coming back into the market this year, and institutional capital is also more of a factor. The ranks of buyers will include both domestic and foreign players, with the latter here in greater numbers than at any time since the mid 1980s.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
