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The last time that Marcus & Millichap broker Joe Koicim saw summer CRE investment sales this active was over six years ago.
“This is the busiest August I’ve had in my career, and I’ve been in the industry for 15 years,” Koicim said. “In 2012, the capital gains tax law changed and rates were raised, fueling activity.”
Back then, property owners wanted to sell their properties before the end of the year to avoid the higher tax rate. Now, similar market forces are at work. Sellers have responded to rising interest rates and property tax increases by putting more assets on the market, particularly multifamily portfolios.
This summer alone, Koicim's signed 14 sales contracts, all for New York City multifamily assets. In addition to higher taxes, the perceived softening of the NYC multifamily rental market has spurred some owners to sell.
“Some of that has to do with how difficult the city has made it to manage Manhattan multifamily buildings,” Koicim said. "On the flip side, we still see some interest in the space from investors who are looking to get out of retail and diversify their holdings.”
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Koicim is fielding calls from buyers who have not traditionally been multifamily investors. These buyers see now as a good time to invest in apartment assets because residential rents have been down in NYC for the last year.
The trend toward increased sales activity in the summer is part of the new normal for commercial real estate players. Mobile devices and the internet have pushed the industry, which is often considered slow to adopt new trends, toward a 24/7 activity level. This summer, as in all other seasons, Koicim keeps his phone within reach at all times.
“As a broker, I am always working,” he said. “No matter where I am, I am continually in touch with my clients."
As the weather starts to cool and real estate professionals head back from the surf and the beach, investment sales activity will continue to pick up. With the Jewish high holidays falling in September, Koicim expects a slight pause toward the end of Q3 before sales increase again through the end of the year.
Investors may well remain cautious about which assets they choose to acquire, and some will look at future market trends and changing tax regulations before making their decisions.
That said, there is always a market for buyers looking for strong fundamentals, such as access to transportation, under-market rents, strong cash flow and growth.
This feature was produced in collaboration between Bisnow Branded Content and Marcus & Millichap. Bisnow news staff was not involved in the production of this content.
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