NYC Multifamily Maintains Strength In Q1 '16

According to Bisnow partner Ariel Property Advisors, NYC multifamily defied a pessimistic macro-environment in Q1, as total dollar volume was even on a year-over-year basis and up significantly from Q4 figures (after excluding the sale of Stuyvesant Town & Peter Cooper Village, of course). 

With modest increases in the average price per SF and continued cap-rate compression being seen across most submarkets, multifamily pricing metrics also held strong throughout the city.

In Q1, NYC saw 173 transactions comprised of 272 buildings totaling $3.98B, a 1% increase in dollar volume, but a 24% decrease in transaction volume and a 33% decrease in building volume compared to Q1 last year, which saw 403 properties traded across 229 transactions totaling $3.94B.

Supported by larger, institutional-sized deals, the number of transactions and buildings traded in the multifamily market has decreased year-over-year, while dollar volume is holding. This is particularly seen in the city’s average transaction size, which grew significantly to $22.5M in Q1 from $17.2M in the same period last year. Large deals are dominating core Manhattan multifamily sales as the average deal size nearly doubled, jumping to $59.6M from $32.2M over the same period.

In addition, trailing six-month averages show the city’s seeing 57 multifamily transactions/month, down significantly from 75/month seen in July of 2015.

“First quarter figures reaffirm our position that NYC multifamily assets are poised to have another great year in 2016,” said Ariel Property Advisors president Shimon Shkury (pictured here with Slate Property Group principal Martin Nussbaum). “Recent contract signings and aggressive bidding activity suggest that investors believe in the continued persistence of today's low-inflation, low-interest-rate environment.” 

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Manhattan

Manhattan dollar volume hit $1.79B in Q1, more than doubling the total of the next-highest submarket. Four transactions north of $200M–with two over $300M–helped push dollar volume. Three of these four deals were single-asset transactions, again accentuating the trend of lower transaction and building volume, while maintaining strong dollar volume. Madison Realty Capital shelled out $270M for The Buchanan, a 300k SF mixed-use property on the corner of East 48th Street and 3rd Avenue. The elevator building, which contains 289 residential units and 16k SF of retail space, sold for $907/SF. The sale marks the first time ownership changed hands in 64 years. In the West Village, Benchmark Real Estate Group sold 194 West 10th St, a 20-unit walk-up building, for $13M, equating to $1.4k/SF.

Brooklyn

Brooklyn bounced back from a sluggish Q4 with $766M in gross consideration. Akelius Real Estate Management, the US real estate arm of Swedish investment firm Akelius, continued its Brooklyn multifamily spending, picking up the Mohawk Apartments, a six-building complex in Clinton Hill, for $56.5M, or $496/SF. The buildings originally made up the Mohawk Hotel until they were converted to apartments in the early 1980s. Farther south in Flatbush, a 95k SF elevator building at 1302 Newkirk Ave traded hands for $25M, or $263/SF. Prior to the sale, the building had been under the same ownership for the past 40 years. 

Northern Manhattan

Similar to core Manhattan, Northern Manhattan saw a large increase in its average deal size when compared to the same time last year, climbing from $11.1M to $21.2M year-over-year. For the quarter, the submarket saw 46 buildings trade totaling $613.5M. It's interesting to note the trailing six month average cap rate in Northern Manhattan fell below 4%, currently sitting at 3.92%. In Hamilton Heights, the 107,000 SF Beaumont Apartments at 730 Riverside Dr sold for just over $33M, which translates to $310/SF, or nearly $521k/unit. The landmarked building was last purchased by A&E Real Estate Holdings in 2013 for $18.2M.

Bronx

Bronx multifamily figures continue to impress as the trailing six-month average price per SF throughout the borough has reached $172 and trailing six-month average cap rate has compressed to just below 5.25%. The largest single asset to trade hands over the course of the quarter was 1511 Sheridan Ave in Mount Hope, which sold for $34.7M, or $171/SF.  In Kingsbridge, a 93.8k SF elevator building at 3873 Orloff Ave sold for $19M, equating to $202/SF and a sub-5% cap rate.

Queens

Queens had an impressive quarter by its standards with 20 transactions made up of 24 buildings totaling $335.9M. Some 42% of the borough’s dollar volume was recorded over the course of two days in January, combining for $140M. The 140k SF mixed-use building at 41-23 Crescent St in Long Island City sold for $97M, or $693/SF. The sale marked the third time in four years the building has traded hands since its completion in 2012. In Flushing, 142-20 Franklin Ave, a 142-unit elevator building, sold for $43M, which equates to $333/SF.