Report: 2015 Another Record Year For NYC Multifamily
In its annual research report analyzing New York City's multifamily market trends and data, Bisnow partner Ariel Property Advisors found that the NYC multifamily market experienced its second consecutive record year in 2015. Every submarket—Manhattan, Northern Manhattan, the Bronx, Brooklyn and Queens—saw significant increases in dollar volume.
NYC saw $19B in multifamily sales across 781 transactions and 1,402 buildings. Although the building volume remained flat when compared to 2014, these figures are a 52% increase in dollar volume and a 2% increase in transaction volume.
While core Manhattan has traditionally dominated the city's large, institutional-sized multifamily deals, Ariel's report found this trend reversed in 2015 as 24 out of 46 transactions over $50M traded outside of core Manhattan, compared to only 18 out of 44 deals in 2014. Even for deals $100M or above, 10 out of 21 deals took place outside of core Manhattan.
In addition, while pricing in Manhattan remained relatively stable, the outer boroughs saw some modest gains. The Bronx in particular saw the strongest gains as the borough’s average price per SF increased 32% year-over-year, jumping from $121 to $160/SF. Brooklyn, on the other hand, saw the greatest increase in median transaction price—skyrocketing from $4.775M to $5.775M—although every submarket saw an increased in these prices.
“New York City continued to be a premier destination for multifamily investing in 2015 as more transactions took place at higher prices throughout the boroughs,” Ariel Property Advisors president Shimon Shkury says. “With the economy gaining strength and global economic turmoil leading many investors to believe that interest rates will stay low, we remain confident in the market’s 2016 trajectory.”
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2015 pricing was slightly up across most metrics, especially the average gross rent multiple, which rose to 19.95 from 18.27. The Upper East Side saw the most transactions, with 31 multifamily transactions totaling $500M, while the East Village, Lower East Side and Chinatown saw a total of 40 transactions totaling $891M.
In 2015, Brooklyn's multifamily dollar volume surged an impressive 54% year-over-year and 196% compared to 2013. Part of the bump was due to a number of institutional deals. In fact, Ariel says deals over $20M accounted for 68% of the borough’s 2015 dollar volume, compared to only 54% in 2014. Williamsburg alone witnessed three deals priced over $90M.
As pricing trended upwards, Northern Manhattan’s dollar volume increased. The submarket also saw a notable number of re-sales as owners who purchased properties in 2012 or 2013 took advantage of 2015's hot market. The largest transaction and best example of this trend was a 21-building portfolio spread across Washington Heights and Harlem, selling for $148.5M after the sellers purchased the portfolio for $75M in 2013.
The Bronx posted the strongest pricing gains of any NYC submarket as it attracted new investors and developers looking to take advantage of the borough’s relatively high-yielding multifamily offerings. The borough’s average capitalization rate fell by 57 basis points and the average gross rent multiple increased from 8.29 to 9.95.
Continuing an aggressive buying spree throughout the borough, the Related Cos acquired over 70 properties containing over 2,000 units, making them one of the Bronx’s largest landlords.
With five sales over $50M, Queens also saw an increase in the number of large deals. Pricing also advanced considerably year-over-year as the average gross rent multiple rose to 14.27 from 10.98 and the average price per square foot increased 20% to hit $284/SF. Flushing, which usually lags behind Astoria and Long Island City, came away with two of Queens’ top multifamily sales.