Multifamily Continues Strong Performance

Shimon Shkury, president of Ariel Property Advisors

NEW YORK CITY—While the market was without a mega deal like the fourth quarter’s $5.45-billion sale of Stuyvesant Town-Peter Cooper Village, the multifamily sector here continued to post modest price increases and cap rate compression in most markets. According to Ariel Property Advisors ‘ newly released review of first quarter activity in the city’s multifamily market, total dollar volume was sharply higher (excluding the Stuyvesant Town-Peter Cooper Village transaction) as compared to the fourth quarter of 2015 and was even on a year-to-year basis. The brokerage firm in its 2015-year-end multifamily report stated that multifamily sales in New York City reached a record-settling $19 billion in 2015. There were 173 multifamily transactions in New York City in the first quarter comprised of 272 buildings totaling $3.98 billion in gross consideration. The final totals represents a 1% increase in dollar volume, a 24% decrease in transaction volume and a 33% decrease in building volume compared to the first quarter of 2015, which saw 403 properties trade across 229 transactions totaling $3.94 billion in gross consideration. The multifamily market continues to be supported by larger, institutional-sized deals as the number of transactions and buildings traded decreased year-over-year, while dollar volume held steady, Ariel states in the report. The city’s average transaction size grew significantly to $22.498 million in the first quarter of this year from $17.2 million a year earlier. Large deals dominated core Manhattan multifamily sales as the average deal size nearly doubled there, jumping to $59.620 million in the first three months of this year from $32 million over the same period last year. “First quarter figures reaffirm our position that New York City multifamily assets are poised to have another great year in 2016,” says Shimon Shkury , president of Ariel Property Advisors. “Recent contract signings and aggressive bidding activity suggest that investors believe in the continued persistence of today’s low-inflation, low-interest-rate environment.” Multifamily dollar volume in Manhattan reached just under $1.8 billion in the first quarter, more than doubling the next highest submarket’s total. Four transactions north of $200 million, including two over $300 million, helped push dollar volume. Similar to the core Manhattan market, Northern Manhattan saw a large increase in its average deal size when compared to the first quarter of 2015, climbing from $11 million to $21 million year-over-year. For the quarter, the submarket saw 46 buildings trade across 29 transactions totaling almost $614 million in consideration. The trailing six month average cap rate in Northern Manhattan fell below 4% and currently sits at 3.92%. Brooklyn bounced back from a sluggish fourth quarter of 2015 with 50 transactions and $766 million in consideration in the first quarter of this year, an increase of 62%. Total multifamily consideration in the Bronx based on 45 transactions in the first quarter of this year was over $470 million a 13% increase from the fourth quarter of last year. The Bronx’s multifamily trailing six-month average price per square foot throughout the borough reached $172 and the trailing six-month average cap rate compressed to just below 5.25%. Queens had 20 transactions made up of 24 buildings totaling nearly $336 million in consideration, which was down 20% compared to the fourth quarter of 2015.