NEW YORK CITY-One might expect that the next move for the multifamily segment might be a downward shift, but both transactions and the value of deals is up by more than half their previous levels, according to new research on third quarter activity.
Multifamily transactions in New York City increased 12%, while the dollar and the dollar volume of those trades jumped by 57%in the third quarter 2013 compared to the same period in 2012, according to Ariel Property Advisors' multifamily quarter in review report.
New York City saw 172 multifamily transactions—comprised of 329 buildings totaling $2.5 billion in gross consideration—in the third quarter, compared to the third quarter of 2012, which saw 153 multifamily transactions comprised of 213 buildings totaling $1.6 billion in gross consideration. In other words, the market saw a 12% jump year-over-year.
Year-over-year, the six-month trailing averages showed cap rate compression and rising prices per square foot. “The third quarter report showed impressive year-over-year gains in volume and pricing,” says Shimon Shkury, president, Ariel Property Advisors. “We believe this momentum will continue through the end of the year.”
The report goes on to break down some of the findings by different portions of the city. In Manhattan, “a handful of institutional transactions, most notably the $600 million sale of a multifamily portfolio owned by Westbrook, pushed third dollar volume up 36%—compared to third quarter 2012 levels—and up 41% from this year's second quarter.”
Further, the research findings note, portfolio sales in Manhattan represented about 3,301 units, a 70% spike in both year-over-year and quarter-to-quarter sales.
In Northern Manhattan,institutional sales drove business. The submarket's dollar volume rose to $365 million, the second highest dollar volume during the third quarter. Like Manhattan, transaction volume was relatively stable with 32 transactions, but portfolio sales included 62 buildings sold, a 38% uptick quarter-to-quarter and a 41% increase year-over-year. A total of 2,215 units sold, a 20% quarter-to-quarter improvmenet and a 106% increase year-over-year. “Clearly, rising rents and ongoing uptown development initiatives are driving greater demand for Northern Manhattan multifamily assets,” the report states.
Brooklyn saw solid gains year-over-year in transaction volume of 14 %, building volume of 21%, and dollar volume of 67%. The borough saw 11 sales north of $10 million, the largest of which was the sale of 202 8th St. in Park Slope for $37.8 million or $740,000 per unit.
Third quarter Bronx multifamily sales showed strong gains on a quarter-to-quarter and year-over-year basis. A total of 47 transactions were completed, the most of any submarket. They were comprised of 78 buildings totaling $321.4 million in gross consideration. The Bronx saw a range of portfolio and individual asset sales, and prices are rising across the borough, the report states, as investors seek yield lacking in other parts of the city.
After an “exceptionally active second quarter,” Queens multifamily sales balanced out to more normal levels, with $110 million in sales—reached with 13 transactions comprised of 31 buildings. A $68 million portfolio with more than 550 units made up the bulk of this activity, the report notes.
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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.
