NEW YORK, NY—New York City’s multifamily market bounced back in the second quarter from its lackluster performance in the first quarter with a 50 percent increase in transactions, 20 percent rise in buildings sold, and a 63 percent jump in the dollar volume of those trades, according to Ariel Property Advisors’Multifamily Quarter in Review: New York City Q2 2013.
In the second quarter 2013, New York City saw 156 transactions comprised of 220 buildings totaling $1.579 billion in gross consideration, compared to the first quarter 2013, which saw 104 transactions comprised of 183 buildings totaling $967 million in gross consideration.
Second quarter 2013 figures represented a slight 7 percent decrease in transaction volume, 4 percent decrease in building volume, and 7 percent decrease in dollar volume compared to the second quarter 2012, which saw 167 transactions comprised of 229 buildings totaling $1.704 billion in dollar volume.
“A lack of inventory in the first quarter created pent-up demand for multifamily assets, which when combined with higher prices led to a substantial increase in activity in the second quarter,” said Shimon Shkury, president of Ariel Property Advisors. “We believe the market in the remainder of the year will build on this momentum and that rising interest rates also may push more owners to sell versus refinance.”
The following is a breakdown of the second quarter multifamily data by submarket:
- Manhattan.Second quarter 2013 dollar volume increased 114 percent from first quarter 2013 levels to $839.729 million. A 67 percent increase in quarter-to-quarter transaction volume to 35 transactions also highlights a much more active market. Notable deals included the $62 million portfolio trade along Bowery and the $400 million sale of 400 West 63rd Street and 60 Riverside Drive.
- Brooklyn. For the second consecutive quarter, Brooklyn led the New York City submarkets in number of transactions with 49 sales consisting of 69 buildings. This represents a 63 percent increase in transaction volume and 77 percent increase in building volume from the first quarter 2013. Dollar volume also was strong in the second quarter 2013 with over $270 million in sales, a 96 percent increase from first quarter 2013 figures. The six months ended June 30, 2013, showed pricing gains compared to the first half of, 2012, with cap rates dropping nearly 100 basis points to 6.21 percent from 7.17 percent and the average price per square foot rising to $214 from $189.
- Northern Manhattan.Dollar volume dropped 39 percent to $186.6 million in the second quarter 2013 compared to the first quarter because several portfolio sales closed during the first three months of this year. Transaction volume increased 48 percent to 31 transactions, however, as smaller deals closed in the second quarter. Year-over-year figures for the submarket held steady. Like Brooklyn, the six months ended June 30, 2013, showed relatively sharp price increases compared to the six months ended June 30, 2012, with investors accepting lower capitalization rates (5.06 percent up from 6.37 percent), higher prices per square foot ($213 up from $169), and higher prices per unit ($174,359 up from $142,397).
- The Bronx.The Bronx exhibited modest gains in the second quarter 2013 in terms of transaction, building, and dollar volume, which respectively increased by 26 percent, 29 percent, and 28 percent compared to the first quarter 2013. While year-over-year statistics show declines in transaction, building, and dollar volume, pricing is clearly going up. This is most easily seen through the higher average price per square foot of $106 and the higher price per unit of $95,757 in the six months ended June 30, 2013, compared to an average price per square foot of $89 and price per unit of $81,531 in the six months ended June 30, 2012.
- Queens. Queens continues to see a much more active 2013 compared to last year with 16 transactions, 19 buildings sold, and $161 million in gross consideration. It is the only submarket in this report to see both quarter-over-quarter and year-over-year increases across the board. Pricing also is strong, with several transactions selling for sub-5 percent capitalization rates. Buyers are showing enthusiasm for the borough’s perceived stability, strong rents, and excellent collection record.
The multifamily transactions included in the analysis occurred at a minimum sales price of $1 million, with a minimum gross area of 5,000 square feet, and with a minimum of 10 units.
Ariel Property Advisors is a New York City investment property sales firm with an expertise in the multifamily market. The firm also produces a number of research reports including the Multifamily Month in Review: New York City; Multifamily Quarter in Review: New York City; Multifamily Year in Review: New York City; Brooklyn Mid-Year and Year-End Sales Reports; Northern Manhattan Mid-Year and Year-End Sales Reports; and the Bronx Mid-Year and Year-End Sales Reports. More information is available at arielpa.com.