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Deals & Dealmakers

Multi-family sales head to new heights

The dollar volume of New York City multifamily transactions in November jumped 128 percent year-over-year and 114 percent month-to-month due to a number of large, institutional sales, according to Ariel Property Advisors’ Multifamily Month in Review for November.

The activity suggests that the soon to be released fourth quarter figures will propel 2013 sales beyond the remarkably high levels seen in 2012, which were buoyed by the expiration of the Bush tax cuts.

SHIMON SHKURY

In November, New York City saw 52 transactions comprised of 160 buildings totaling $1.334 billion in gross consideration, the highest monthly dollar volume this year.

Year-over-year, transaction volume declined by 13 percent, and building volume rose 48 percent compared to November 2012, which saw 60 transactions comprised of 108 buildings totaling $585.028 million.

November’s figures also showed a 58 percent increase in building volume despite a modest 29 percent drop in the number of transactions compared to October, which had 73 transactions comprised of 101 buildings valued at $623.57 million.

“Owners are taking advantage of today’s very low capitalization rates and buyers are borrowing at historically low rates,” said Shimon Shkury, president of Ariel Property Advisors.

“We think that some of the recent sales volume, especially on the institutional side, has been driven by both parties trying to take advantage of the attractive financing environment before a possible shift in 2014.”

The following is a breakdown of the November 2013 multifamily data by submarket:

• Manhattan. Manhattan led the city in dollar volume with over $800 million in multifamily sales in November, which is a 410 percent increase compared to the previous month and a 149 percent increase compared to November of last year. This was made possible by three institutional transactions that saw pricing well above $150 million, the largest of which was 251 Cherry Street which reportedly sold for $280 million.

• Northern Manhattan. Led by a single portfolio sale comprised of 84 buildings and totaling $350 million in gross consideration, Northern Manhattan saw a year-over-year 607 percent increase in building volume to 99, and a 768 percent increase in the dollar volume of those trades to $424 million. The pricing on that portfolio, which featured properties spread throughout the area, represented $230,000 per unit and $212 per square foot.

• Brooklyn. With 11 transactions comprised of 17 buildings totaling $42.865 million in gross consideration, it was a relatively slow month for Brooklyn, which has been a consistent leader in transaction volume throughout the year. Pricing, however, remained strong.

• The Bronx. The Bronx this month saw nine transactions comprised of 16 buildings and $36.435 million, a decline from previous levels. Though totals for the borough were on the lighter side this month, it is important to note that none of these sales occurred at lower than $90 per square foot, continuing the borough’s positive trend in pricing.

• Queens. Queens had a representative month in November — seven transactions for 12 buildings valued at $28 million–after an unusually strong month of October. Transaction volume, building volume, and dollar volume were relatively stable year-over-year. Cap rates for the borough also continue to surprise some, remaining just below 5 percent on average.

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