Ariel Reports: Slowing Submarkets Not A Cause For Concern

After an impressive two-year stretch, Manhattan saw investment property sales activity pull back from elevated 2015 levels while prices across most asset types continued to show some appreciation, according to Ariel Property Advisors' newly released Manhattan 2016 Mid-Year Sales Report.

For the first half of this year, Manhattan saw 304 transactions consisting of 361 properties totaling approximately $19.35B changing hands.

The previous six months, which saw 345 transactions for 477 properties with an aggregate dollar volume of $22.3B, capped off a banner year that included the $5.5B sale of Stuyvesant Town/Peter Cooper Village. By excluding this outlier transaction from the aggregate dollar volume, January to June's figures represent a 15% increase in total dollar volume compared to the second half of 2015.

Looking ahead, Ariel expects sales volume and pricing to hold at current levels over the balance of the year. Local and national economic growth prospects remain strong, Manhattan remains a safe haven for capital from around the world and interest rate increases are expected to be slow and modest. For a copy of the report, click here.

Despite a strong performance in terms of pricing, Brooklyn's investment sales market followed Manhattan's modest retreat from elevated 2015 sales volume, according to Ariel Property Advisors' Brooklyn 2016 Mid-Year Sales Report.

However, the more conservative sales numbers may be a bit misleading. 

The borough's multifamily sector—which saw $2.3B in sales and accounted for roughly 53% of total dollar volume—had a particularly strong half, helping offset lower dollar volume seen in development and commercially oriented asset types. For the first half of 2016, Brooklyn saw 697 transactions consisting of 882 properties totaling $4B.

Year-over-year, this represents a 22% decrease in dollar volume, a 10% decrease in transaction volume and a 19% decrease in property volume. The first half of 2015 saw $5.2B in sales across 771 transactions and 1,095 properties traded.

Brooklyn investment sales activity from January to June 2016 is also roughly on pace with the sales activity seen during the second half of 2015. Looking ahead, Ariel expects sales volume and pricing to hold at current levels over the balance of the year.

Unfortunately, the potential of the L train shutting down for a year or more could cause short-term pain for parts of the borough, but on the other hand, may be a boon for others like Downtown Brooklyn, a neighborhood that will have many new units to fill in the coming years. For a copy of the full report, click here.

The Queens real estate market, much like New York City as a whole, has experienced a slight correction in the early part of 2016 as year-over-year dollar volume, transaction volume and property volume all decreased, according to Ariel Property Advisors' Queens 2016 Mid-Year Sales Report.

The market's overall fundamentals, however, remain strong and investors continue to view Queens as a stable place to invest while also remaining one of the few parts of New York City with significant upside.

In the first half of 2016, Queens saw 327 transactions consisting of 451 properties totaling $2B. This translates to a 4% decrease in dollar volume, an 11% decrease in property volume and a 10% decrease in transaction volume compared to the first half of 2015.

Northwest Queens remains the most active quadrant of the borough, with over 60% of transactions and dollar volume attributed to those neighborhoods. Looking ahead, we expect sales volume and pricing to hold at current levels over the balance of the year.

But an incline is likely not far off. Queens properties—especially those located along the 7 train—may see a bump in rents and overall investor interest. For a copy of the report, click here.

While much of New York entered into a mild—and generally expected—cool down, the Bronx continued its upward trajectory during the first half of 2016 as the borough saw modest year-over-year gains in both total dollar volume and building volume.

From January to June, the Bronx saw 188 transactions consisting of 322 properties totaling $1.36B. These figures represent a 7% increase in dollar volume and a 10% increase in property volume, despite a 12% drop in transaction volume compared to the same time frame in 2015, which saw 213 transactions comprised of 294 properties totaling $1.27B in gross consideration. They also represent a 19% increase in transaction volume, a 14% increase in property volume, and a 4% drop dollar volume compared to second-half '15 figures.

The southwest Bronx was the most active quadrant of the borough as over 44% of transactions and 42% of dollar volume was attributed to those neighborhoods. Looking ahead, we expect sales volume and pricing to hold at current levels over the balance of the year.

The lack of 421-a and a tighter lending environment for new construction projects are placing downward pressure on the borough's development site prices, especially in areas outside the South Bronx, but the tremendous capital being deployed paints a bright long-term picture for real estate investments. For a copy of the report, click here.

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