Bronx commercial real estate property sales mixed; transactions down 28 percent, dollar volume up 20 percent

The number of commercial real estate transactions in the Bronx fell by 28 percent but the dollar volume of those transactions rose by 20 percent in the first half of 2012 compared to the second half of 2011, according to Ariel Property Advisors’ Bronx 2012 Mid-Year Sales Report. For the first half of the year, the Bronx saw 84 transactions comprised of 138 properties totaling $491.045 million in gross consideration, compared to the second half of 2011, which saw 115 transactions comprised of 153 properties totaling $408.541 million in gross consideration, and the first half of 2011, which saw 125 transactions comprised of 169 properties valued at $376 million. The report tracks multifamily, development, industrial, and commercial property sales over $1 million in the borough. “Although investment property sales figures for the Bronx appear to be sending mixed signals to the market, transactions are averaging close to $6 million dollars, nearly double the average deal size seen in both the first half and second half of 2011,” said Scot Hirschfield, vice president, Ariel Property Advisors. “This tells us that the Bronx is experiencing a flurry of large scale transactions and portfolio sales.” Mr. Hirschfield cited as examples of this trend the sale of 2150 Wallace Avenue, an elevatored mixed-use property in Pelham Parkway, which was one of the highest per unit transactions ever achieved in the North Bronx; the sale of the Southern Boulevard Portfolio, a nine-building package containing 372 units in the South Bronx brokered by Ariel Property Advisors that sold for $33.25 million; and the partnership between prominent affordable housing developer L&M Development Partners and a private equity firm to purchase a portfolio of former Mitchell Lama properties in Castle Hill for over $50 million. The report highlighted the following activities by sector: Multifamily: Bronx multifamily sales remained strong in the first half of 2012. There were 56 multifamily deals totaling $306 million in gross consideration. While the number of transactions was down from both first half and second half of 2011, the values are trending positively in all pricing metrics. Our research shows that Cap Rates are averaging around 7.35 while GRM’s are 6.82. The improved trends are a product of a more favorable lending environment, where interest rates are at an all-time low and banks are bullish on lending for cash-flowing multi-family assets. Development Sites: Bronx development dipped in the first half of 2012. There were only seven transactions with $27 million in gross consideration. The largest deal was the sale of the former headquarters for H.W. Wilson Co., a major publisher of library reference materials. The warehouse, combined with several nearby development sites in the Highbridge section of the Bronx, sold for just over $10 million. Land prices in the first quarter of 2012 saw the average price per buildable square foot come in at approximately $24. This is roughly in line with levels seen in recent years. Industrial Sites: CubeSmart’s purchase of the storage facility at Bartow Avenue represented the largest property sale in the Bronx since the collapse of Lehman Brothers. This deal catapulted the industrial sales volume over 1000% from a year ago. In addition, several companies such as Chefs’ Warehouse’s and Fresh Direct are helping to cement the South Bronx’s status as a world-class food distribution hub by expanding their operations in Hunts Point and Port Morris respectively. Commercial Sites: Retail strips and other commercial properties lagged behind in transaction value, but there are several new large retail developments making headlines throughout the Bronx. This includes the upcoming to be determined multi-use facility at the re-developed Kingsbridge Armory, the expanded shopping mall at Bay Plaza, and New York City’s first outlet mall adjacent to the Whitestone Multiplex Cinemas. For more information, please contact Mr. Hirschfield 212-544-9500, ext 16, [email protected]. For a copy of the Bronx 2012 Mid-Year Sales Report, please see http://arielpa.com/newsroom/report-APA-Bronx-mid2012-Sales-Report. Ariel Property Advisors is a New York City investment property sales firm with an expertise in the multifamily market. The firm also produces a number of research reports including the Multifamily Month, Quarter, and Year in Review: New York City reports, and the Northern Manhattan, Brooklyn, and Bronx Sales Reports. More information is available at arielpa.com.