NYC Multifamily Sales Volume Dropped 20% in Q3
Ariel says market "has not yet felt the full effect of rising interest rates."
NYC’s multifamily market, which notched sales totaling $3.57B in the third quarter—71% higher than the five-year quarterly average of $2.085B and a 37% increase YOY over red-hot results in 2021—appears to be cooling off.
Multifamily sales in NYC in Q3 totaled 128 transactions across 212 buildings, with quarter-over-quarter transaction, dollar and building volumes declining by 20%, 17% and 11%, respectively, according to a Q3 market report from Ariel Property Advisors.
Noting that multifamily investment in NYC still is tracking substantially higher than the average quarter over the past five years, Shimon Shkury, president of Ariel, said in a statement “the market has not yet felt the full effect of rising interest rates.”
The Q3 report’s “watchlist” warned that the NYC multifamily market is experiencing “underwriting volatility” as the Fed continues its campaign of rate hikes.
“Investors must now weigh exit strategies, as well as what their interest rate will be at closing and at potential refinancings,” Ariel’s report said.
Ariel’s Multifamily Quarter in Review charts multifamily transactions with a minimum sale price of $1M involving a minimum of 10 residential units.
Brooklyn accounted for about $1B and Manhattan (below 96th Street) accounted for $2.1B of the Q3 multifamily sales in the NYC market; together the two boroughs combined for 89% of the dollar volume, up from 85% in Q2, Ariel reported.
Among the top 10 sales of Q3, six were from Manhattan and four were in Brooklyn. The top transactions of the quarter were A&E Real Estate’s purchase of 160 Riverside Boulevard on the Upper West Side for $415 million and Ponte Gadea Group’s purchase of 114 Fulton Street in the Financial District for $487.5 million.
The top sale in Brooklyn was KKR’s purchase of 80 Dekalb Avenue in Fort Greene for $190 million.
Ariel’s watchlist also noted what it called a positive “macroeconomic” indicator involving increased use of the NYC subway system.
“According to the MTA, weekday ridership both coming into the city and commuting around the city averaged about 5.74 million people per day in the third quarter of 2022 and within the last week of September the average rose to 6.11 million people per day. These figures represent 64% and 69%, respectively, of total ridership pre-pandemic,” Ariel’s report said.
In the latest trade of a Manhattan apartment tower, Stockdale Capital Partners and Triyar Realty Group, two affiliated LA-based investment firms, acquired the 31-story, 181-unit Falcon Tower at 245 E. 44th St. for $50M from the owners, the Manocherian family.
The building, in proximity to Grand Central Terminal, was built in 1987 and features one-bedroom units renting for about $4,000/month.