Multifamily sales and development of investment properties in the Bronx surge by Esti Broyde

Esti Broyde, Roey Realty

The aggressive purchase of investment properties as well as development continues into 2016 where investors are finding better returns on their investments in the Bronx in comparison to Brooklyn, Manhattan and Queens. All this activity and a number of large portfolio transaction, may still be the last hope for affordability in comparison to the other boroughs. In particular, neighborhoods such as Hunts Point, Melrose, Morrisania, Mott Haven, and Tremont in the South Bronx have seen a tremendous increase in sales volume.

The Bronx has long offered a world of diverse neighborhoods, outstanding restaurants, art institutions, museums and unique tourist attractions like Yankee Stadium – each of which draws hundreds of thousands of visitors each year. Recently completed real estate developments, as well as those in the pipeline, are sure to enhance the borough’s quality of life for future generations to come.

New investors and developers are looking to take advantage of the borough’s relatively high-yielding multifamily offerings. The average GRM according to Ariel Properties, rose to 10.62 into the first quarter of 2016. This is in contrast to the past two years where rent multiple in the Bronx multifamily market has increased from 7.24 to up to 13x in some transactions. Among some of the most active players in the borough are The Related Companies, The Lightstone Group and Harbor Group. These institutional investors reinforce the confidence of high returns for the Bronx presently and in the future.

The question that many investors have been asking themselves is, what happens to their returns if the market corrects itself. Many believe that due to the strength of the current market, even if the market drops, it will not be to the extent of 2008-2009. Furthermore, the rental market in the Bronx is strong and the demand is high, thus still allowing investors to have promising returns in the future.

One of the basic rules about real estate is “location, location, location.” Thus, the Bronx definitely has this covered, as it is close to Manhattan and surrounded by major transportation. Therefore, besides investors, investment sales firms have been focusing their time and energy on selling off market investment properties in the Bronx. Since the trade and re-trade in the past few years have proven to be stronger than in the other boroughs, brokers are finding their clients good properties with descent returns.

The Bronx development market, especially in the South Bronx, has been increasing into 2016. Developers such as Chetrit Group have been setting their eye on the South Bronx. This development surge is due to many affordable housing groups looking for housing and an increasing number of private developers looking to build new market rate housing, thereby increasing the price of properties.

As the Bronx continues to evolve, the need for new types of developments, such as hotels are evolving too. The development surge in the South Bronx, will further drive economic growth. These monumental changes will further enhance the borough with an abundance of multifamily, retail, transportation and tourism options.

Esti Broyde is the principal at Roey Realty, New York, N.Y.