NYC CRE Sales Tick Up to $2.8B in Second Quarter
Seven office buildings were sold with average prices down 25%.
About $2.8B in NYC commercial real estate investment sales closed in the second quarter, after what analysts hope was the bottom of a transaction slump in Q1 when CRE investment sales registered a dismal $2.2B.
NYC is on pace for a 2023 total of about $10B, which is less than a third of its historical 10-year average sales transactions, according to Avison Young data reported by Bisnow.
According to Avison Young, the second quarter data indicates that the NYC market has reached “an inflection point” and transaction volume is on the way back up.
NYC’s office market continues to drag down the overall CRE sales numbers. There were only seven office buildings old in the second quarter in NYC, trading at an average price of $588 per SF, a 25% decrease, according to Avison Young’s report. The $403M of office buildings sold in Q2 represents a 44% decrease from the trailing four-quarter average.
City officials have estimated that more than half of the office inventory is under water, with a wave of CMBS loans coming due and lenders unwilling to refinance older properties as valuations drop.
Avison Young characterized the top two office deals of the second quarter as “short sales” in which buildings were off-loaded for the same price as the debt on the property.
The top deals include Pearlmark Real Estate’s sale of 126 East 56th Street to Sovereign Partners for $113M, which Avison Young said was about the same as the remaining debt, and Silverstein Properties sale of 529 Fifth Avenue to a partnership of Empire Capital Holdings and Namdar Realty Group for $107.6M.
The East 56th Street building is 80% occupied and the Fifth Avenue property is 63% leased, the report said.
There were $899M in multifamily sales in NYC in the second quarter, a 42% drop from the trailing four-quarter average. Cap rates were up 46 bps to 5.26%.
The largest multifamily trade of Q2 was Black Spruce Management and Orbach Group’s acquisition of 265 East 66th Street, part of the Solow portfolio, for $402M. The second largest multifamily transaction was KB Cos. sale of 600 Columbus Avenue for $120M to a joint venture of Slate Property Group, KABR and Avenue Realty Capital, a deal with a 4.4% cap rate.
The Q1 2023 total of $2.2B in NYC commercial real estate investment sales, which involved 108 properties, was a 59% decline across the trailing four-quarter average and a 53% decrease from Q4 2022.
The Q1 decline in investment sales was seen across all sectors. Only two apartment buildings and one office tower traded for more than $100M in Q1.