By Holly Dutton
Northern Manhattan has dominated the investment sales market in New York this year as developers race to buy multi-family properties to feed demand for apartments.
“The northern Manhattan market is really on fire,” said Bob Knakal, chairman and founding partner of Massey Knakal, at the firm’s midtown headquarters Tuesday morning. “It’s really been remarkable.”
According to a Massey Knakal first half of 2013 market report, with the area north of 96th Street has a stock of 7,000 properties out of the 165,000 in the city, less than one third of other neighborhoods.
“The northern Manhattan activity, on a relative basis, is about three times more than we’re seeing in The Bronx and over six times more than we’re seeing in Queens,” said Knakal. “The northern Manhattan market really is the story so far in the first half of the year.”
During the first half of 2013, the dollar volume in northern Manhattan was about $546 million, the highest first half dollar volume in northern Manhattan since 2007 and up 8.5 percent since 2012.
Price per square foot jumped 16 percent compared to 2012, and 50 percent compared to 2011. In addition, northern Manhattan was the only market in the first half of 2013 where price per square foot was up for all property types. In the first half of 2013, property sales increased 11 percent from the first half of 2012 with 133 properties sold.
Multi-family buildings were responsible for 103 of the 133 sales, with walkup properties accounting for 79 while retail and elevator buildings followed with 18 and 12, respectively. “Northern Manhattan is quickly catching up with Manhattan proper,” said Robert Shapiro, first vice president of sales for Massey Knakal, about cap rates.
Since 2010, the rate of cap rate compression consistently increased, and during the first half 2013 fell 80 basis points to 5.2 percent. Cap rates have fallen almost 200 basis points in the past two years.
“Harlem and northern Manhattan are seeing some pockets of real growth,” said Shapiro. “With young families and students looking to find affordable housing, we’re seeing tremendous influx of people flocking to the neighborhood.”
The influx has led to higher quality retail like a new Duane Reade at 137th Street and Broadway. “People used to demand the amenities in that area,” said Robert Shapiro, “The amenities are now bringing people to the marketplace.”