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Big buys boost Bronx multifamily market to $2.4B

Bolstered by large multifamily portfolio transactions and several game-changing commercial and development deals, the dollar volume of investment sales in the Bronx rose above $2.39 billion, a 39 percent increase from the previous year, according to Ariel Property Advisors’ Bronx 2014 Year-End Sales Report.

Investment sales transaction volume increased by 11 percent to 342, and the number of properties traded increased 20 percent to 577 in 2014 compared to 2013.

SCOT HIRSCHFIELD
SCOT HIRSCHFIELD

The Bronx development market remained in high demand during 2014 and saw an 88 percent increase in dollar volume to $129.7 million over 40 transactions comprised of 73 properties with 2.99 million buildable square feet.

Twenty-four properties totaling nearly 2 million buildable square feet traded in the South Bronx neighborhoods of Hunts Point, Melrose, Morrisania, Mott Haven, and Tremont.

“Developments in the Bronx gained momentum in 2014 and that interest is expected to continue,” said Scot Hirschfield, vice president, Ariel Property Advisors.

“A leading indicator of this new activity was the Chetrit Group’s fourth quarter closing of 101 Lincoln Avenue in the South Bronx, which the developer plans to combine with two adjacent sites and build at least six residential towers.

“This project is within the Lower Grand Concourse Waterfront project along the Harlem River south of 145th Street where the borough’s leadership is seeking to create a commercial and residential complex offering up to 4,000 residential units.”

With many affordable housing groups looking for housing and an increasing number of private developers looking to build new market rate housing, it is expected that demand for Bronx development sites will continue, further pushing up pricing.

The 101 Lincoln Avenue site occupies the entire block with a lot size of 133,810 SF. There is 518’ on the Harlem River and 333’ frontage on Bruckner Boulevard.
The 101 Lincoln Avenue site occupies the entire block with a lot size of 133,810 SF. There is 518’ on the Harlem River and 333’ frontage on Bruckner Boulevard.

This demand could be bolstered even more with the city’s proposal to upzone a new Bronx neighborhood called “Cromwell Jerome” and target it for affordable housing development.

Multifamily dollar volume year-over-year rose 67 percent to $1.8 billion, transaction volume increased 24 percent to 225, and the number of multifamily properties trading jumped 45 percent to 401 compared to 2013.

The multifamily market accounted for 65 percent of the borough’s investment sales transaction volume and 77 percent of its dollar volume. As a further indication of the strong market, the average cap rate compressed from 7.71 percent in 2013 to 6.16 percent in 2014.

Additionally, the average gross rent multiple grew from 7.24 to 8.54 over that same period.

“Last year, the multifamily market in the Bronx caught the attention of well-known real estate companies and saw several institutional transactions drive multifamily dollar volume higher,” said Jason M. Gold, associate vice president of Ariel Property Advisors.

“In one of the largest multifamily deals of the year, the Related Companies purchased a portfolio consisting of 35 buildings in various North Bronx neighborhoods for $253 million, as well as a 237-unit building in Parkchester.”

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