The average sale price of a Manhattan apartment building cracked the $500 per sq. ft. mark during the first half of this year, according to a new report.

Most of the value gains were achieved below 96th street where Manhattan’s most expensive residential districts are located.

Manhattan-based investment sales brokerage Massey Knakal Realty Services reports that the average sale price for elevator-served buildings located south of 96th street in Manhattan registered $517 per sq. ft. during the first half of 2007, up 21.3% from the year-ago period.

Investors clearly value elevators. Sales of walk-up buildings averaged $508 per sq. ft. for the first half of this year, up just 7% from the same period in 2006.

Sales volume also climbed through midyear. For example, the number of walk-up buildings that were sold jumped from 81 to 178 between each six-month period. Sales of elevator and mixed-use buildings were up by 19%, too.

“The report shows that despite some turbulence in the New York City capital markets, multifamily buildings in Manhattan as well as in the outer boroughs are still in high demand,” says Robert Knakal, chairman and founding partner of the eponymous firm.

Massey Knakal’s “New York City Income Market Report” crunches sales data on deals of $500,000 and up throughout all five New York City boroughs.