NYC Multifamily Bounces Back In Q2 As Sales Volume Hits $1.93B
The New York City multifamily market had a strong second quarter, rebounding sharply from sluggishness earlier in the year as investors grew more confident in the asset class. While sales volume in the city remained lower on a year-over-year basis, the pickup in activity suggests more bullishness and less uncertainty among investors than in Q1.
Hesitation seen in the first quarter lingered in April, but sales activity picked up markedly in May and June, culminating with the year’s first $100M transaction in Brooklyn. On a quarter-over-quarter basis, volume metrics increased in every submarket, with the city registering the highest number of transactions since Q3 2016.
“It could be too early to call, but the multifamily market likely troughed in the first quarter,” Ariel Property Advisors President and founder Shimon Shkury said. “The market noticeably bounced back in recent months and we have seen a significant pickup in activity.”
From April through June, New York City had 119 transactions comprised of 278 buildings totaling $1.93B in gross consideration. This represents a 42% increase in dollar volume, an 11% rise in transaction volume and an 81% jump in building volume compared to Q1. However, compared to the same quarter last year, Q2 saw dollar volume decline 43%, transaction volume fall 35% and building volume slide 12%.
Pricing in the second quarter appreciated year-over-year across all metrics in the Bronx and Queens, while it continued to decline in Brooklyn.
From a macroeconomic perspective, a robust labor market has inspired confidence in the Federal Reserve that the economy is strong enough to withstand the impact of higher interest rates. The Fed’s policy-making arm raised short-term interest rates in June, its fourth increase since 2015.
“A pickup in recent bidding activity on active listings and contract signings suggests things are beginning to turn around,” Ariel Property Advisors Executive Vice President Michael Tortorici said. “Our baseline expectation is for investment sales volume and pricing to remain stable at current levels through the end of the year.”
Ariel Property Advisors gave us the transactional breakdown by submarket, complete with vital statistics and a review of the most newsworthy deals.
Manhattan was reinvigorated in Q2 after a period of relative dormancy in Q1. The borough led the city in both dollar and transaction volume, barely edging out Brooklyn in both categories. For the quarter, Manhattan saw $507M in gross consideration across 31 transactions.
The largest Manhattan deal during the quarter occurred on the Upper West Side, where the Fruchthandler’s FBE Limited purchased a four-building portfolio at 60-68 West 107th St. for $52M — $516/SF or $519K/unit.
Northern Manhattan had the largest quarter-over-quarter gains of any submarket, as four different transactions exceeding $20M pushed dollar, transaction and building volumes to more than double those in Q1. For Q2, Northern Manhattan saw $324M in dollar volume (up 181% from Q1) across 24 trades (up 140% from last quarter).
Brooklyn fared well in Q2, and narrowly missed leading NYC in dollar volume for the second straight quarter. It registered three sales over $75M. For the quarter, Brooklyn saw 29 sales comprised of 90 buildings totaling $502.3M in gross consideration. These numbers represent a 26% and 76% improvement in dollar and building volume, respectively, but a decrease of 9% in transaction volume compared to the previous quarter.
The borough had the city’s sole trade above $100M this year. In Sunset Park, a 42-building, 403-unit affordable housing portfolio traded for $100M, $281/SF or $248K/unit.
The Bronx was the only submarket to register both quarter-over-quarter and year-over-year increases in dollar volume, despite joining Brooklyn as the only places where total transactions fell compared to the previous quarter. The borough had 44 buildings sell across 20 transactions totaling $324.5M.
Queens recorded strong gains as a bevy of $10M transactions and two large portfolio sales boosted the borough’s figures ahead of Q1’s stats. For Q2, 15 transactions consisting of 69 buildings traded in Queens for $270.6M. These numbers are a significant improvement from Q1’s 10 trades involving 14 buildings that amounted to $168M in dollar volume.
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