Manhattan Investment Volume Set to Skyrocket by 76% This Year
Manhattan posted $3.2 billion in dollar volume for the third quarter.
CRE investors in Manhattan are starting to pick up their activity. The city in the third quarter posted 80 transactions for $3.2 billion in dollar volume, according to a property sales report from Avison Young. The two categories increased by 29 percent and 16 percent from the June quarter, respectively.
And the recent activity is a vote of confidence for Avison Young, which is now anticipating Manhattan’s transactions for investment sales to rise 16 percent and total volume to soar by 76 percent in 2024, from the previous year.
“It is the belief of many that the market is beginning to round into form heading into the last quarter of 2024,” the CRE firm wrote.
Development sales for the third quarter led the way, seeing $824.7 million in total dollar volume, representing an increase of 194 percent from the three months through June and 191 percent year-over-year. The Related Companies recorded the largest deal for this category thanks to its $632.5 million acquisition of 625 Madison Avenue.
Conversion activity also triumphed, with $519 million in total dollar volume, representing a 59 percent increase from the second quarter. Also, the number of sales shot up 120 percent to 11.
Retail saw health volume growth of 22 percent, with sales hitting $318.1 million, and transactions were up 100 percent. However, pricing per square foot plunged 32 percent to $1,207.
However, some sectors experienced negative activity. Office plunged 25 percent to sales of $794.5 million, though it was up 58 percent year-over-year and prices per square foot rose two percent to $382. Multifamily and mixed-use posted sales of $717.4 million, a decrease of 11 percent. Pricing per square foot slipped two percent to $574.
Cap rates are highest among the retail sector at 6.98 percent. That’s followed by multifamily at 5.59 percent, and office at 4.58 percent.
While Avison Young is optimistic about strong property sales growth in 2024, it does point to some trends to look out for. This includes office-to-residential conversions, and the September rate cut impact.