NYC Investment Sales Fell Nearly 80% In Q2
New York City commercial real estate players were bracing for a major drop-off in sales activity during the worst of the crisis, and figures released this week show they had good reason to be afraid.
Overall, dollar volume during the second quarter totaled $1.5B across all five boroughs, according to data from Avison Young released Wednesday. That marks a 77% drop from the same time period last year. The data indicates the year is on track to see some $15.3B worth of deals.
“That’s pretty stark, and it’s less than half the 10-year average,” Avison Young Head of Tri-State Investment Sales James Nelson said. "Every single borough saw declines. … It does feel a bit like 2009, in that there are very few sellers.”
He noted, however, there were just $5.2B in sales in 2009, and this year is on pace to well exceed that.
“A big difference comparing this to 2009 is that there is a lot more capital in the market … [but] owners that can wait to sell will wait," he said. "The sales you hear about will be estate, partnership disputes or distress.”
At the peak of the market in 2015, total sales volume came in at $68B, and they have been steadily declining since. All areas of the city recorded significant declines over April, May and June. Queens had just six sales for a total of $65M. In the Bronx, dollar volume was 93% down, hitting $24M. Manhattan chalked up $754M, an 83% drop from the year before — and there were just 30 deals closed. In Brooklyn, sales numbers and volume decreased by 40% and hit $626M.
As an asset class, Manhattan office sales took a major hit, with dollar volume going down 93% on the four-quarter trailing average to reach $145M across just four sales. Multifamily dollar volume for the borough slid 77% to reach $151M, while development sites were down 60% to $134M for the quarter.
Though deals were scant, there were some sales closed. JPMorgan Chase closed on the $115M acquisition of 410 Madison Ave. from Bank of China last month, for example, a deal that had been in contract for more than a year. Billionaire brothers David and Simon Reuben bought 609 Fifth Ave. from SL Green, a $168M purchase that helped push up retail sales volume for the borough to $256M.
Ackman-Ziff Managing Director Marion Jones, who is marketing a development site at 1769 Fort George Hill for $52 per SF, said that despite some expectations, there may not be widespread distress in the market.
“There’s activity and there is life, and it really isn’t all doom and gloom,” she said. “People build entire funds based upon a prediction of near-term distress, and that doesn’t always arrive or arrive in the volume that investors expected. I think that even lenders who take hold of assets are not necessarily going to view themselves as being distressed sellers."