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NYC investment sales hit ‘all time low’

 In the first half of 2020, investment sales in New York City totaled $10.5 billion, down 54 percent compared to the first half of 2019, according to the Real Estate Board of New York (REBNY)’s 2020 Biannual Investment Sales Report.

The figures represent all-time lows since REBNY’s reporting began back in 2015.

However, it is the severity of the decline that is unprecedented, according to Real Capital Analytics. From the close of 2019 to the end of H1 2020, average deal count in the Americas dropped by almost 50 percent; the decline of the same magnitude took 11 months during the Great Financial Crisis.

The total number of investment sales transactions in New York City declined 32 percent year-over-year, to 1,229 transactions, according to REBNY. The total sales volume declined 54 percent year-over-year to $10.5 billion.

Overall, the sales volume of multifamily rental properties declined 50 percent and transactions declined 29 percent compared to the first half of 2019.

According to the report, the total tax revenue for the City and State generated from investment sales was $314 million, with $62 million in NYS transfer tax and $252 million in NYC transfer tax.

Total tax revenue in the first half of 2020 represents a 49 percent decrease from the previous six months and a 58 percent decrease from the previous twelve months.

“We continue to see the devastating and long-lasting impacts the pandemic has had on the health and stability of the New York economy,” said REBNY President James Whelan.

JAMES WHELAN

“Real estate is a fundamental driver of the City’s economy and it’s essential to New York’s recovery that the industry bounce back. We will continue to advocate for federal aid that addresses the needs of both the real estate industry and New York’s overall economic health.”

Key findings from the report include:

  • Citywide office sales volume declined 47 percent year-over-year to $3.6 billion. Total transactions declined 31 percent year-over-year to a total of 124 in the first half of 2020. The average price was $40.4 million representing a 28 percent decline year-over-year.
  • Multifamily rental properties sales volume citywide declined 51 percent year-over-year totaling $2 billion. Transactions declined 29 percent year-over-year to a total of 465 in the first half of 2020 with an average price of 17 million. This represents a drop in average price of 50 percent year-over-year.
  • Citywide, hotel sales volume declined 81 percent year-over-year to $294 million. Total transactions declined 70 percent year-over-year to a total of 6 in the first half of 2020 with an average price of $48,992,413. This represents a drop in average price of 37 percent year-over-year.
  • Retail sales volume citywide declined 27 percent year-over-year totaling $2 billion. Transactions declined 27 percent year-over-year to a total of 199 in the first half of 2020 with an average price of $10 million. Year-over-year, the average price remained flat.

“This analysis illustrates the continued challenges the City and industry face on the road towards recovery and the critical need for smart, forward-thinking policies at both a local and state level,” Whelan said. “If we are going to come back a stronger City, we need solutions that will address the pressure points we’re experiencing.”

Investment Sales By Borough

The total number of transactions across the five boroughs was 1,229 in the first half of 2020, with all five boroughs seeing a decline in sales.

Manhattan: Investment sales volume declined 59 percent year-over-year, totaling $5.89 billion. Similar to other boroughs, Manhattan transactions saw a 35 percent decline year-over-year. Overall, Manhattan experienced the largest decline in average sales price of the five boroughs, with a 37 percent decline. Office transactions experienced a 12 percent decline year-over-year, with sales volume declining 45 percent to $2.9 billion. Multifamily, non-elevator sales volume dropped 55 percent year-over-year, to $333 million. The biggest decline in Manhattan transactions was hotels, with a 75 percent decline.

Amazon’s $978M purchase of the Lord & Taylor Building at 424–434 Fifth Avenue in March is among high profile deals propping up the 2020 numbers.

Brooklyn: Investment sales volume declined 41 percent year-over-year, totaling $2.5 billion. Although Brooklyn transactions declined 25 percent year-over-year, across the five boroughs, Brooklyn boasted 35 percent of the total transactions. With the most sales transactions at 432, nearly half of these Brooklyn transactions were multifamily rental building sales. Multifamily rental, non-elevator transactions declined 25 percent, with a 21 percent decline in sales volume to $404 million. Retail experienced a 34 percent decline in transactions and 45% decline in sales year-over-year, to $232 million.

Bronx: Investment sales volume declined 37 percent year-over-year, totaling $848 million. The number of Bronx transactions declined 23 percent year-over-year at a total of 212 transactions. Vacant land transactions experienced an 11 percent increase year-over-year, totaling a 36 percent increase in sales volume to $194 million. Multifamily rental, non-elevator properties saw a 38 percent decline in transactions and 62 percent decline in sales volume, to $87 million.

Queens: Investment sales volume declined 57 percent year-over-year, totaling $1 billion. Queens experienced a sharp decline in transactions from the previous 12-months, with a 41 percent decline year-over-year. Two Queens property categories experienced an increase in average sales price year-over-year, including multifamily rental, non-elevator sales’ 18 percent increase to $2 million and garages/gas stations/auto sales’ 108 percent increase to $5 million respectively. Industrial transactions declined 52 percent year-over-year, with a 66 percent decline in sales volume to $343 million.

Staten Island: Investment sales volume declined 18 percent year-over-year, totaling $185 million. Staten Island transactions also experienced a 36 percent decline year-over-year. While Staten Island was the only borough to experience an increase in average sales price, due to a number of large sales, the median price decreased 12 percent year-over-year. Vacant land sales volume decreased 56 percent year-over-year, with a total of $27 million. On the retail side, sales volume declined 25 percent year-over-year to $32 million.

The Shops at Richmond Avenue on Staten Island traded for $31.5 million earlier this year.

REBNY’s Biannual Investment Sales Report is New York City’s most comprehensive compilation of investment sales data. Created in 2015, the report captures citywide and borough breakdowns of closings data for 10 different property types – multifamily rental elevator, multifamily rental non-elevator, office, garages/gas stations/auto, vacant land, industrial, hotel, retail, commercial condo, and other. All data on recorded sales are provided by the New York City Department of Finance (DOF) Automated Register Information (ACRIS).

Download the complete Biannual Investment Sales Report for the first half of 2020 here.

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