Mark Halloron, Director  GRS | Corteq (732) 450-8960

Mark Halloron, Director
GRS | Corteq
(732) 450-8960

It’s hard to imagine, with rents so high in New York City, that the multifamily market could have challenges. Apparently, that was the case in the first quarter of this year, when transaction volume was down, according to Aerial Property Advisors.

However, activity picked up in the second quarter, as highlighted in a recent report by the firm. Between the first and second quarters, there was a 42-percent jump in transactions, hitting $1.93 billion.

Much of the problem during the first quarter was reportedly hesitancy surrounding the presidential election. Though there was still some weakness in April, it was apparently the best quarter for the number of transactions seen in the city since last year’s third quarter.

The first sale over $100 million for the year also transpired when Fairstead Capital purchased a portfolio of buildings in Sunset Park, Brooklyn–giving it 42 assets dedicated to affordable housing.

On a year-over-year basis, though, volume is still down. In Manhattan, for example, dollar volume of sales was down 55 percent, from $721.7 million to $324 million. The only borough that saw an increase in that metric was The Bronx, where price volume hit $324.5 million, a 16-percent jump year over year.

The only other category that saw a year-over-year improvement was the number of buildings sold, in Queens, which saw an impressive 103-percent jump, hitting 69 assets.

But it’s good news that quarter over quarter the city, for the most part, saw increases in all categories, including dollar and building volume.

Marcus & Millichap points out that some of the success in New York City’s multifamily market during the second quarter can be attributed to job growth and household formation. Additionally, it’s so expensive to buy housing in New York that most people tend to rent dwellings, which hasn’t changed for decades.

M&M also reveals that despite a year-over-year decrease in transaction volume, investors are bullish on New York City apartment development. There are 35,000 units scheduled to be built this year, most of them in Long Island City, Queens, downtown Brooklyn and Manhattan’s West Side.

And despite a declining number of transactions, vacancy rates couldn’t get much tighter, with Manhattan at 2.9 percent and Brooklyn at 3.1 percent. Interestingly, concessions by owners are increasing.  Lois Weiss reported yesterday for Bisnow that rent concessions in NYC “were the second-highest on record, and nearly triple that of a year ago. At the same time, the inventory expanded for the 22nd month in a row.”

New York’s apartment market will always be formidable. Building sales may peak and valley, but being the biggest city in the country, with a less-than-affordable buyers’ market for most, ensures that multifamily investment is a safe bet for parties that can afford those transactions.

About GRS Group

GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions. 

Through the company’s proprietary management process, Global Services Connection, GRS Group delivers an integrated suite of services including Financial Advisory, Transaction Management, Assessment and Title Insurance.  We provide a single point of contact, capable of leveraging the GRS Group portfolio of companies, and delivering customized solutions to assist our clients in achieving their investment goals.