NYC Investment Sales Volume Down Over 50% From Last Year In First Half Of 2020

Between January and July, New York City investment sales dropped by half from the same period last year.

With the city on pause to mitigate the spread of the coronavirus from much of March to June, sales transaction volume plummeted to $10.5B in the first half of this year, 54% less than the same period last year and the lowest it has been since at least 2015, according to the Real Estate Board of New York’s Biannual Investment Sales report released Friday.

Lower Manhattan

“We continue to see the devastating and long-lasting impacts the pandemic has had on the health and stability of the New York economy,” REBNY President James Whelan said in a statement. “Real estate is a fundamental driver of the city’s economy and it’s essential to New York’s recovery that the industry bounce back.”

Hotels were the hardest hit asset class, according to the report, with investment sales volume down 81% year-over-year to $294M total. The price tag on these transactions — just under $49M — dropped by 37%. With tourism at a lull in the city that never sleeps, the occupancy rates for hotels that remain open is expected to average between 42% and 43% this year overall, STR Senior Vice President Jan Frietag told Bisnow in July.

Meanwhile, average retail investment sale price was the only one that held steady year-over-year, but sale volume declined 27% to $2B.

 As the industry grapples with uncertainty over when companies will fully return to the office, sales volume for office real estate totaled $3.6B, a 47% year-over-year decline. The average price dropped 28% year-over-year to $40.4M. In July, investors said they were seeing big discounts on office buildings in major cities, like New York.

“Until we find a vaccine, there will be downward pressure on the New York City and major gateway cities' office sector,” Artemis Real Estate Partners Managing Director Anar Chudgar said on a Bisnow webinar.

Despite better-than-expected rent collection rates, multifamily investment sales dipped 51% year-over-year with a 50% year-over-year average price drop to $17M as apartment vacancies continue to rise and rent prices continue to drop across all boroughs.

Since the onset of the crisis, real estate lobby groups have pushed for federal funding to aid the city's gaping budget holes as a result of fighting the coronavirus. Without this and a clear economic plan from City Hall, experts say the real estate industry will continue to hurt along with the city’s economy overall.

“We will continue to advocate for federal aid that addresses the needs of both the real estate industry and New York’s overall economic health,” Whelan said in his statement.

The first month of 2020’s second half looks brighter than months prior. There was an 11% month-to-month increase in investment sales volume to $3.95M from June to July, according to REBNY’s Monthly Investment and Residential Sales Report, a 52% year-over-year decline.

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