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Deals & Dealmakers

Queens investment sales spike as money chases new frontiers

According to Ariel Property Advisors’ newly released, Queens 2015 Year-End Sales Report, Queens investment property sales saw strong, steady growth in 2015.

Jackson Heights. Photo by Jay Santiago/ Flickr
Jackson Heights. Photo by Jay Santiago/ Flickr

Rising market rents, steady growth in condominium prices and several blockbuster commercial transactions continued to support the submarket’s evolution into a premier destination for business, residential development, and capital investment.

In 2015, Queens saw 688 transactions consisting of 925 properties totaling approximately $4.38 billion in gross consideration.

This translates to a strong 20 percent increase in dollar volume despite a moderate five percent decrease in transaction volume and a two percent decrease in property sales volume compared to 2014, which saw 728 transactions comprised of 947 properties totaling $3.65 billion in gross consideration.

Accounting for nearly 32 percent of the borough’s dollar volume and pushed by a significant number of multifamily trades, Astoria, Ridgewood, Elmhurst and Corona saw increased activity.

“While Long Island City and Astoria continue to be an anchor for the borough, we have recently seen areas like Jamaica and Flushing emerge as a new frontier for public and private investment,” said Dan Wechsler, Vice President at Ariel Property Advisors.

“Several rezoning studies slated to be released in 2016, particularly the LIC Core Study Area and The Flushing West Study, will affect large swaths of underutilized and undervalued property.”

Rising multifamily pricing metrics suggest elevated interest in Queens’ properties.

As demand continued to outpace supply, the average cap rate dropped 48 basis points to 4.71 percent, the average price per square foot rose 25 percent to $284, the average gross rent multiple rose an impressive 3.46 points to 14.27 and the average price per unit rose 36 percent to $240,000.

Multifamily properties saw a nine percent increase in gross dollar volume compared to 2014 with $1.39 billion in gross consideration. This increase occurred despite moderate decreases in both the number of transactions and properties traded.

As seen by several 2015 re-sales of properties that traded 12-36 months ago, strong fundamentals and low interest rates continue to push prices higher. One example is the sale of 43-31 45th Street in Sunnyside, which sold for $27,500,000 in 2015 after trading for $17,000,000 million in 2014.

Prices for development sites throughout Queens continued their upward trajectory from 2014 with developers placing a strong emphasis on Long Island City, Jamaica and Flushing.

There were fewer development site transactions in 2015 compared to 2014, but a sharp rise in prices and a lack of available properties on the market suggests this can mostly be attributed to a lack of supply than demand.

Rents remain healthy and condominium buyers are ready and willing to pay top dollar for new product amidst scarce supply.

Condominium sales at The View at 46-30 Center Blvd in Long Island City have sold in excess of $1,500 per square foot while rents at the Pearson at 45-50 Pearson Street in Long Island City are exceeding $60 per square foot.

Lastly, the year saw strong growth for commercial sales, particularly in Flushing, evidenced by the boroughs largest transaction, the $400,000,000 sale of the Mall at Sky View Parc to Blackstone.

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