NEW YORK CITY—The number of multifamily buildings sold in New York City jumped 19% to 1,230 and the dollar volume of those trades increased 4% to $8.87 billion in 2013 compared to 2012, according to Ariel Property Advisors' multifamily year-in-review report for the city. Multifamily transaction volume citywide fell a modest 3% year-over-year to 675.
“New York City multifamily assets saw aggressively higher prices throughout all submarkets and pricing metrics in 2013 as demand, driven by rising rents and low interest rates, continued to outpace supply,” says Shimon Shkury, president of Ariel Property Advisors. “Average capitalization rates dropped while gross rent multiples, prices per square foot, and prices per unit rose.”
The most significant pricing gains occurred in Northern Manhattan and Brooklyn, which saw cap rates decline by more than 100 basis points. Manhattan and Queens also saw significant gains, but to a lesser degree.
“While Manhattan saw a dip in its multifamily volume, multifamily sales in the other submarkets surged as did their pricing, suggesting that some investors typically focused only on Manhattan are now exploring less expensive offerings elsewhere in the city,” Shkury says. “Northern Manhattan and Queens, for example, had tremendous years. Northern Manhattan's multifamily dollar volume hit $1.6 billion, which is more than double 2012 and the second highest dollar volume recorded for the city. Queens had an even bigger year, with a 214 percent jump in dollar volume year-over-year to $1.088 billion.”
Portfolio sales also dominated the market in several key neighborhoods within the city, especially Manhattan's East Village and Upper West Side; the Fordham and Mount Hope areas of The Bronx; Crown Heights and Flatbush in Brooklyn; Jackson Heights and Sunnyside in Queens; and Central Harlem and Washington Heights in Upper Manhattan.
The following is a breakdown of the 2013 multifamily data by submarket:
In Northern Manhattan, there were 116 transactions comprised of 312 buildings in Northern Manhattan, a 62% year-over-year increase in the number of buildings sold and the highest level in the city. Central Harlem led the area in sales with 36 transactions totaling 155 buildings. Investors seem to be catching on to the positive economic impact various developments like the Columbia University Expansion, Whole Foods on Lenox Avenue, and the 125th Street revitalization will have on the area.
In Queens, 70 transactions comprised of 133 buildings totaled $1.08 billion in gross consideration, shattering sales statistics seen 2012 and 2011. Many investors who previously searched for opportunities in Long Island City and Astoria turned their attention to properties in Elmhurst, Jackson Heights and Flushing. And for the first time a number of market rate new construction properties traded for prices previously limited only to Manhattan and prime Brooklyn. This included the sale of 41-23 Crescent St. in Astoria, for $688 per square foot; and 30-50 21st St. & 11-15 Broadway for $443 per square foot.
With 189 transactions comprised of 269 buildings in Brooklyn, the borough saw nearly the same number of transactions and portfolios change hands in 2013 as 2012, but the dollar volume of the trades rose 18% in 2013 to $1.2 billion. Meanwhile in the Bronx, 156 sales comprised of 264 buildings totaling $1.08 billion was transacted. The Bedford Park section of the Bronx saw the most multifamily transactions and dollar volume with 16 transactions totaling $142 million in gross consideration.
Finally inManhattan below 96th Street, transactions declined 28% to 144, with the dollar volume of those trades falling 28% to $3.9 billion. Rising rents, limited inventory and continued low interest rates, however, led to major pricing gains for the year.
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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.
