Manhattan investment property sales hit $27 billion in 2013 according to Ariel Property Advisors' Manhattan 2013 Year-End Sales Report

The number of investment properties sold in Manhattan declined slightly in 2013 from 2012, but the dollar volume of those deals increased a healthy 24% to $27 billion, Ariel Property Advisors' Manhattan 2013 Year-End Sales Reports shows. The report covers the real estate market south of E. 96th Street and south of West 110th Street, and transactions $1 million and above. For the year, Manhattan saw a total of 672 transactions comprised of 852 properties totaling $27.018 billion in gross consideration, compared to 2012, which saw $21.8 billion in gross consideration through 765 transactions comprised of 935 properties. "We largely attribute the decrease in transaction and property volume to the expiration of the Bush tax cuts at the end of 2012, which led many owners to sell in the fourth quarter of 2012 instead of the first half of 2013," said Randy Modell of Ariel Property Advisors. "The increase in total dollar volume in 2013 was primarily driven by an active institutional investor market focused on large office transactions and a substantial increase in the sale of development sites. Such activity demonstrates investors' confidence in Manhattan's economic prospects, mainly the city's business climate and its future residential condominium market." The multifamily product class remained strong in 2013 taking 41% of Manhattan's investment property transaction volume and 25% of its dollar volume. In 2013, there were 276 multifamily transactions comprised of 391 properties totaling $6.638 billion in gross consideration. Multifamily pricing, aided by rising rents and low interest rates strengthened throughout the year and pushed the average capitalization rate down to 4.36%, from 4.681% in 2012. The average price per s/f climbed to $648 from $560 in 2012 and the average gross rent multiple climbed to 15.60 from 13.74 in 2012. Record high rents and condo / coop sales prices - along with scarce new condo product lent tremendous momentum to Manhattan development sites sales in 2013, which exhibited a 79% increase in total dollar volume over 2012, the largest increase among all asset classes, with $4.9 billion in gross consideration. The highest number of development site transactions in 2013 were concentrated in Chelsea (12) and SoHo (10). "New residential developments are rising throughout the city, many of which are targeting the ultra-luxury segment with projected sell-outs north of $3,000 per square foot," said Howard Raber of Ariel Property Advisors." The price per buildable s/f consequently trended higher in 2013 with prime development sites in Manhattan with scale trading above pre-recession levels, some above $700 per buildable s/f." Notable development transactions for the year include the sale of 239 10th Avenue for over $800 per buildable s/f and 55-61 West 17th Street for $744 per buildable s/f. The office market jumped 52% to $12.196 billion in gross consideration in 2013 versus $6.008 billion in 2012. While there was a 25% and 27% decrease in transaction volume and property volume, respectively, the high dollar volume is reflective of transactions involving institutional investors for properties such as 650 Madison Avenue, a 27-story, 600,496 s/f office tower that traded for $1.3 billion.