NEW YORK CITY-Thus far, this year has been about the multifamily segment, according to Ariel Property Advisors, which on Wednesday held a briefing in Manhattan on the state of the market in the first half of 2013. Multifamily activity has continued going strong while investment sales transaction and property volume dipped.

In the city's multifamily market, “there's been a dramatic increase in transaction volume in the second quarter from the first,” says Shimon Shkury, president. The dollar and building volumes also spiked. “There was pent up demand from the first quarter, which was low after many investors rushed deals through at the end of 2012 to avoid tax implications.”

He expects similar results for the latter part of the year, even with some uncertainty in the market. “The second half of the year will be great, both in terms of transactions and pricing. There are question marks, in terms of the new Fed chairman and our next Mayor, but the job market is strong, rents will increase because in the supply/demand equation, demand will win out, and we believe banks will start lending a little more on loan-to-values.”

As previously reported, Ariel Properties' research states that New York City saw 156 transactions comprised of 220 buildings totaling $1.6 billion in the second quarter, compared to the first quarter 2013, which saw 104 transactions comprised of 183 buildings totaling $967 million. In Manhattan, second quarter dollar volume increased 114% over the first quarter to $840 million.

The city's hottest borough, Brooklyn, is seeing a surge in demand even in less buzzed about areas like Bedford Stuyvesant, Bushwick and Crowne Heights, said Shkury. “It's not just areas you hear about, like Williamsburg and Park Slope.” Investment property transactions in Brooklyn increased 20% and the number of properties sold rose 17% in the first half of 2013 compared to the first half of 2012, according to Ariel Property Advisors. During the first half of 2013, Brooklyn saw 362 transactions comprised of 498 buildings, compared to 301 transactions comprised of 426 buildings for the same period in 2012.

In the Bronx, investment property transactions rose 6% and the number of properties sold increased 17% in the first half of 2013 compared to the first half of 2012. During the first two quarters of 2013, the borough saw 112 transactions comprised of 174 properties totaling $407.5 million, compared to the same period in 2012, which saw 106 transactions, with 149 properties sold for a total of $467 million.

Meanwhile, total investment property sales in Manhattan showed year-over-year declines in transaction and property volume, with some growth in dollar volume, according to Ariel Properties. In the first half of the year, Manhattan saw 274 transactions consisting of 351 properties totaling $10.5 billion. That's a 12% decrease in transaction volume and a 9% decrease in property volume, though there was a 28% increase in dollar volume over the first half of last year, which saw 310 transactions comprised of 384 properties totaling more than $8 billion.

Among three of the more significant deals—the Sony building at 550 Madison Ave., the General Motors building at 761 5th Ave. and the C.I.T building at 650 Madison Ave.—two may become condominium conversions and many of the buyers were international investors, Shkury noted.

The rental market in Northern Manhattan is particularly strong, with developers reporting properties commanding as much as $40 per square foot, and even $50 in high demand areas, such as near the Columbia University campus or close to 125th street, Shkury said. Cap rates in the area are below even 2007, with some properties changing hands at 4-5%.

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Rayna Katz

Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.