New York’s Multifamily Sales Took a Summer Dive

Though August was the weakest month of 2016 in terms of total transactions value, experts predict a strong end-of-year for the Big Apple multifamily market.
Shimon Shkury, Founder & President of Ariel Property Advisors

Shimon Shkury, Founder & President of Ariel Property Advisors

New YorkAriel Property Advisors released its latest multifamily report for the Big Apple and the numbers show a significant slowdown in transactions in the last month of summer. More specifically, 48 transactions comprising 63 buildings were closed in August, all worth nearly $575 million. Only three deals topped $40 million, according to the research. Coming after five consecutive months that each saw more than $1 billion in multifamily sales, the amount represents a 32 percent decrease year-over-year.

In August 2015, the same number of transactions brought in roughly $843 million for 84 buildings. “Buyers appear to be pricing higher interest rates and the supply of new rental units coming to market in the next few years. Nonetheless, our sense is that these trends reflect a modest correction from historically low cap rates and we will closely monitor how the pricing trends evolve,” Shimon Shkury, founder & president of Ariel Property Advisors, told Multi-Housing News.

In the entire third quarter of 2016, the 178 transactions across New York City consisting in 284 buildings totaled more than $3 billion. Compared to the same period last year, there was a 15 percent drop in dollar volume and a 22 percent decrease in property volume. Despite the slowdown, experts remain optimistic about the end of the year. “Buyers and banks are acting with more caution, well-priced properties continue to receive a ton of interest from diverse groups of buyers. We’re aware of several institutional-caliber transactions slated to close in the fourth quarter so we expect a strong finish to the year,” Shkury added.

Manhattan maintained its top position as the main NYC submarket, with more than $168 million in sales during August. Brooklyn followed close behind with roughly $160 million, but it was Queens that performed unexpectedly well—nine transactions worth more than million $156 in the same month. “For the third straight quarter, Queens showed considerable year-over-year growth in multifamily dollar volume. The borough saw 22 trades consisting of 29 buildings and $326.6 million in gross consideration during third quarter of 2016, which represents a 65 percent year-over-year increase in dollar volume,” Shkury explained.

The increase in sales shows a higher demand for multifamily properties in Queens and this also is also reflected in the prices of assets. A notable trade was a 76-unit elevator multifamily building located in Elmhurst at 51-25 Van Kleeck St., which sold for $15 million or $298 per square foot and $272,000 per unit. “Prices have shown considerable appreciation—looking at six-month trailing averages, the average price per square foot is up roughly 17 percent and the average price per unit is up by 25 percent year-over-year,” Shkury concluded.

Image courtesy of Ariel Property Advisors