Manhattan Multifamily Sales Volume Spikes in 1Q10

he dollar sales volume of multifamily properties in Manhattan more than doubled in the first quarter

Dees Stribling, Contributing Editor

New York–The dollar sales volume of multifamily properties in Manhattan more than doubled in the first quarter of 2010 compared with the previous quarter, according to a new report by Eastern Consolidated, a real estate investment specialist. Multifamily sales during 1Q10 were $1.15 billion, compared with $470 million in 4Q09.

The report posits that the surge reflects a common sentiment in the industry, namely that the investment market has turned a corner as banks are starting to off-load properties. Also, that the persistent gap between what sellers believe their properties ought to fetch and what buyers want to pay has narrowed, at least somewhat.

The number of transactions during each quarter wasn’t all that different, according to the report–108 in the first quarter of 2010, up from 98 in the last quarter of 2009, meaning that more expensive properties traded in the first quarter. During all of 2009, no Manhattan multifamily property traded for more than $100 million. By contrast, “five multifamily buildings traded for more than $100 million in the first quarter,” says the report. “Three of which were sold in one transaction from Macklowe Properties to Sam Zell’s Equity Residential.”

In the Macklowe-Zell deal, the three buildings traded for a total of $475 million, or about $545 per square foot. The average price per square foot for Manhattan multifamily in 1Q10 wasn’t quite that high, however, coming in at $260 per square foot, or roughly in line with previous quarters.

Though the first quarter spike represents a lot more sales activity than during any quarter of 2009, it’s still puny compared with the frenetic days of the mid-2000s. During the first quarter of 2006 and second quarter of 2007, for instance, Manhattan multifamily sales hovered around $4 billion; and during the unlikely-to-be-repeated fourth quarter of 2006, sales topped $6 billion by a considerable amount.

Still, the report points to further improvements in sales volumes in the quarters ahead. “Pricing expectations are more aligned than they were six months ago,” Eastern Consolidated CEO Peter Hauspurg, noted in a statement. “We expect volume to grow given the pent-up energy in the market.”