New York City saw a resurgence of institutional deals in September, propelling 3Q 2014 multifamily figures to the strongest quarterly transaction volume and nearly the highest dollar volume seen since the blockbuster 4Q 2012,, according to Ariel Property Advisors' Multifamily Quarter in Review: New York City I Q3 2014.
Multifamily dollar volume jumped 46% to $3.258 billion and transaction volume increased 16% to 213 in 3Q 2014 compared to 3Q 2013, which saw 184 transactions totaling $2.234 billion in gross consideration.
Figures in the third quarter also surpassed the second quarter of 2014 showing a 26% increase in transaction volume, a 7% increase in building volume, and a healthy 74% increase in dollar volume in 3Q 2014 compared to 2Q 2014, which saw 307 buildings trade across 169 transactions totaling $1.873 billion in gross consideration.
"Third quarter volume was buoyed by 12 institutional level deals in September at prices over $20 million, including three transactions that were over $200 million," said Shimon Shkury, president of Ariel Property Advisors. "This is unique in that the summer months were primarily dominated by smaller deals and, consequently, deal flow in the third quarter exceeded our expectations."
Shkury continued, "With global instability pushing rates lower and sustained demand meeting constrained supply, we expect this market strength to carry into the remainder of the year."
The following is a breakdown of the third quarter 2014 volume by submarket:
Manhattan. Several very large institutional transactions took place in the Manhattan, helping spike dollar volume year-over-year and quarter-to-quarter to 40 transactions totaling $1.48 billion. Notable transactions include the sale of two Upper East Side packages; a $485 million package of mixed-use elevatored buildings located on East 88th Street and 2nd Avenue and a $270 million package of elevatored buildings located on East 89th Street and 1st Avenue. These sales translate to $592 and $749 per s/f, respectively. Pricing in Manhattan remains stronger than ever, as the six-month trailing average price per s/f has increased 31% from a year ago, from $647 to $844 per s/f.
Northern Manhattan. Volume increased across all metrics in 3Q14 for Northern Manhattan, as the sub-market saw a 41% increase in transaction volume to 45, a 29% increase in building volume to 88, and a 36% increase in dollar volume to $508 million year-over-year. A package of two Central Harlem buildings located at 2053 Frederick Douglass Boulevard and 300 West 112th Street anchored the sub-market's strong quarter, selling for $30 million, or $465 per s/f. It should be noted that this property also included air rights that can be utilized for future development.
Brooklyn. Brooklyn dollar volume jumped 50% to $505 million and transaction volume rose 15% to 54 in 3Q 2014 compared to the 3Q 2013. A 52-unit package of walk-up buildings located at 107-113 Greenpoint Avenue in Greenpoint recently sold for $23.75 million, or $616 per s/f, highlighting the borough's surge in pricing. In Clinton Hill, a 65,000 s/f building sold for $28.6 million, or $440 per s/f. The new ownership plans to renovate the units in an effort to focus on catering to the nearby student populations of Pratt Institute and Long Island University.
Bronx. The Bronx continued its strong 2014 in the third quarter, as dollar volume increased 24% to $415 million year-over-year and remained steady quarter-to-quarter. A slew of transactions over $10 million, including the sale of2230 Grand Concourse for $10.2 million, or $166 per s/f, solidified the borough's strong quarter. In terms of pricing, the Bronx has seen an impressive 128 basis point drop in its 6-month trailing average cap rate from last year, decreasing from 7.48% to 6.20%.
Queens. Aided by an enormous $216 million, 1,269-unit portfolio sale in Kew Gardens, Queens experienced the highest increase in both year-over-year and quarter-to-quarter dollar volume of any sub-market, growing 165% and 355%, respectively, to $347.78 million. A handful of other institutional transactions over $15 million in Elmhurst, Hollis and Murray Hill helped the Queens figures improve as well.
The multifamily transactions included in the analysis occurred at a minimum sales price of $1 million, with a minimum gross area of 5,000 square feet, and with a minimum of 10 units. Tags: