NEW YORK CITY—The number of investment properties sold in Manhattan declined slightly in 2013 from 2012, but the dollar volume of those deals increased a healthy 24% to $27 billion, Ariel Property Advisors' Manhattan 2013 year-end sales reports shows. The report covers the real estate market south of east 96th street and south of West 110th street, and transactions valued at $1 million and above.
For the year, Manhattan saw a total of 672 transactions comprised of 852 properties totaling $27 billion, compared to 2012, which saw $21.8 billion of properties in 765 transactions comprised of 935 properties. However, there's a logical reason for the decline, Ariel officials note.
“We largely attribute the decrease in transaction and property volume to the expiration of the Bush tax cuts at the end of 2012, which led many owners to sell in the fourth quarter of 2012 instead of the first half of 2013,” says Randy Modell of Ariel. “The increase in total dollar volume in 2013 was primarily driven by an active institutional investor market focused on large office transactions and a substantial increase in the sale of development sites. Such activity demonstrates investors' confidence in Manhattan's economic prospects, mainly the city's business climate and its future residential condominium market.”
The multifamily sector remained strong in 2013, Ariel reports, with it taking 41% of Manhattan's investment property transaction volume and 25% of its dollar volume. In 2013, there were 276 multifamily transactions worth $6.6 billion. Multifamily pricing, aided by rising rents and low interest rates, strengthened throughout the year. The average price per square foot climbed to $648 from $560 in 2012 and the average gross rent multiple climbed to 15.60 from 13.74 in 2012.
Record high rents and condo/coop sales prices—along with scarce new condo product—lent momentum to Manhattan development sites sales in 2013, which exhibited a 79% increase in total dollar volume over 2012, the largest increase among all asset classes, with $4.9 billion transacted. The highest number of development site transactions last year were concentrated in Chelsea and Soho.
“New residential developments are rising throughout the city, many of which are targeting the ultra-luxury segment with projected sell-outs north of $3,000 per square foot,” says Howard Raber of Ariel Property Advisors.”
The price per buildable square foot consequently trended higher in 2013 with prime development sites in Manhattan with scale trading above pre-recession levels, some above $700 per buildable square foot.” Notable development transactions for the year include the sale of 239 10th Ave. for over $800 per buildable square foot and 55-61 W. 17th St. for $744 per buildable square foot.
The office market jumped 52% to $12.2 billion in 2013 versus $6 billion in 2012. While there was a 25% and 27% dip in transaction volume and property volume, respectively, the high dollar volume is reflective of transactions involving institutional investors for properties such as 650 Madison Avenue, a 27-story, 600,496-square-foot office tower that traded for $1.3 billion.
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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.
