NYC multifamily sales rise to $7.8 billion in 2012, a 54% increase from 2011

New York City multifamily transactions rose 36%, the number of multifamily buildings sold increased 42%, and the dollar value of those trades jumped 54% in 2012 compared to 2011, according to Ariel Property Advisors’ Multifamily 2012 Year in Review: New York City. In 2012, there were 639 multifamily transactions consisting of 964 buildings totaling $7.8 billion in gross consideration, compared to 2011, which had 470 transactions with 679 buildings totaling $5.056 billion in gross consideration. "In 2012, we saw major year-over-year increases in multifamily sales as many owners rushed to close fourth quarter transactions before the increase in capital gains taxes," said Shimon Shkury, president of Ariel Property Advisors. "Strong gains in transaction, building, and dollar volume were seen in all five sub-markets covered in our Multifamily 2012 Year in Review. Prices were also on the rise as demand driven by rising rents and low interest rates continued to outpace even elevated supply levels." The following are key highlights from the report: Cap Rates Compress, especially in Manhattan. New York City multifamily properties continued to stand out as a premier investment opportunity in 2012, offering safety and upside that few alternative investments could provide. With rents that continued to rise amidst elevated unemployment levels and with another mid-year Euro crisis that nearly threatened global economic stability, New York multifamily assets continued to attract investors from around the world. Demand outpaced supply even as more inventory came to market because of concerns about rising capital gains taxes, and prices rose in both core areas and in secondary markets where investors sought higher yields. This trend was particularly evident in Manhattan, where it became fairly typical to see cap rates below 4.5%. Brooklyn Multifamily Gets Manhattanized. With many parts of the borough achieving rents near Manhattan levels, Brooklyn saw a series of institutional and midrange multifamily sales at prices almost comparable to Manhattan core assets. Investors not only appear to be looking for safe reliable cash-flow in prime areas, but also may be pricing in future conversion potential as local condominium and co-op prices also continue to increase. The borough saw 173 multifamily transactions comprised of 259 buildings with a total dollar value of $1.155 billion, which represents a 41% increase in multifamily transactions, a 46% increase in the number of multifamily buildings sold, and a 51% increase in dollar volume. The Bronx Steps Up. Falling cap rates in Northern Manhattan and Eastern Brooklyn led many multifamily operators to seek opportunities in The Bronx. This led the borough to see significant gains in transaction volume and a 43% increase in dollar volume, much of which came via institutional sales. Both the average price per square foot and the average price per unit also rose in 2012. High Demand for Northern Manhattan. With a 70% increase in transaction volume, a 72% increase in building volume, and an 83% increase in dollar volume, Upper Manhattan saw the biggest transactional gains of the areas analyzed in this report. Investors are betting that high rents below 96th St. will trickle uptown, especially with major institutional investment coming from educational and medical organizations. Steady Year for Queens. Multifamily demand for Queens properties continued to be strong but a lack of available inventory led to lighter trading activity. Prime areas of Astoria and Long Island City saw rapidly rising prices while other parts saw stable, cash-flow driven values. Multifamily transaction volume in Queens increased by 20%, building volume by 31%, and dollar volume by 2%. The multifamily transactions included in the analysis occurred at a minimum sales price of $1 million, with a minimum gross area of 5,000 s/f, and with a minimum of 10 units. Public records were used to compile the report figures, which were reported by ACRIS and other sources deemed reliable. More information is available from Mr. Shkury at 212-544-9500, ext. 11, or [email protected]. For a copy of the report, please see http://arielpa.com/newsroom/report-MFYIR-2012. 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.