By Sarah Trefethen
Timour Shafran recently brokered a deal on an apartment building in University Heights that he’s sure will prove a profitable investment for his client.
“In the worst-case scenario, with financing in place, all he has to do is maintain what he has and he will see a 10 percent return on his cash,” said Shafran, founder and owner of CitiCore, Inc. “If he ran it a little more efficiently and changed the boilers from oil to gas, he could probably see 13 percent.”
In today’s multifamily market, that’s the way they do it in the Bronx.
Apartment buildings have become some of the most attractive investments around — and the action is spilling over to neighborhoods not traditionally associated with hot deals.
Consumers dealing with the tight credit market are driving the demand for city rentals, Shafran said.
“You can’t buy anything, so you have to rent, and you can’t afford to drive from the middle of nowhere because gas prices are through the roof.”
In 2011, the Bronx saw roughly $543 million in multifamily sales, according to the real estate services firm Ariel Property Advisors — two thirds of the borough’s total dollar volume that year. The company also noted relatively high yields and capitalization rates compared to multifamily investments in other boroughs.
“There are brokers that would just take my Bronx deals and make a very good living,” said Aaron Jungreis, president of Rosewood Realty Group.
Jungreis has closed a total of eight deals in the Bronx so far this year, he said, including a 52-unit building on the Grand Concourse and 198th Street in Bedford Park that sold for $5.25 million. But while he’s seeing a lot of activity in the Bronx and Queens, he said, Manhattan and Brooklyn are still the most active boroughs for multifamily deals.
Jungreis reports recent deals including $53 million for a 17-building package of walk-up buildings on the Upper West Side and $9 million for a 72-unit building on Ocean Parkway in Brighton Beach.
“It’s crazy, I’m doing on average now two to three deals a week. I’ve never seen anything like this,” he said.
Robert Khodadadian, an associate director with Eastern Consolidated, estimates the multifamily market has gone up between 13 and 15 percent so far this year alone.
He is working on a $770 per foot deal on an elevator building on the Upper West Side, he said, and is seeing a lot of action in the range of $500-$600 per foot around the High Line in SoHo and Tribeca.
“Elevator [buildings] are hard to come by and selling at a premium,” he said. “Everyone is looking for five-story walkups.”
While the demand from investors for multi-family properties is high, investors are finding supply is low.
“People are asking for high numbers. For me as a buyer, it’s very hard to find a deal,” said Nathan Blatter of Whitestone Realty, “Interest rates are low, and people would rather refinance than sell.”
Blatter has purchased over 1,000 units in the Bronx in the past 20 months he said, and recently paid $100,000 per unit for one purchase, on behalf of a client willing to pay a premium because of other properties already owned in the area.
The Bronx is changing, Shafran noted, including a trend of immigrant communities traditionally associated with Queens taking root to the north.
“For the most part, the Bronx is still a difficult borough — the euphemism of the day — but it’s serviced by a lot of mass transit and there are a lot of good parks,” Shafran said. “I think it needs a name change, a facelift. In the South Bronx, you’re actually closer to Manhattan than most neighborhoods in Brooklyn.”