Values increasing: The Queens multi-family market increased 25% in less than one year

So, what's going on with the multifamily market in Queens? We have seen apartment buildings trading at record prices for the last 6 months in the borough. In prime areas, it is not a surprise anymore to see a trade at sub 4% cap rates and 13X+ the gross rent. We are also seeing price per unit and price per s/f skyrocket. For example, the last 4 walk-up sales in Astoria traded for $195,000, $218,000, $215,000 & $223,000 per unit (average of $214,000); along with price per s/f at $315 per s/f, $393 per s/f, $291 per s/f & $357 per s/f (average of $339 per s/f). Let the following sentence settle in: Last year in 2013, the averages for a walk-up in Astoria were $160,000 per unit and $250 per s/f. That is basically a 25%+ increase in value...in less than one year. In Woodside, where it was thought you can still buy buildings at a "discount," so far this year there have been 3 sales in the neighborhood. Two walk-up sales, with averages of $208,000 per unit and $304 per s/f. Last year, the averages for walk-ups in Woodside were $151,000 per unit and $197 per s/f. As everyone reading this can clearly see, value is increasing rapidly. The 3rd sale was a 54-unit elevator building on 69th St., which traded for $10.35 million or $191,000 per unit. This building traded for a 4.1% cap rate and 12.8X Gross Rent. It's not only the "prime" neighborhoods in Queens that are seeing higher prices. Last year in Jamaica, Queens, the 2013 averages for a walk-up were $87,043 per unit and $123.75 per s/f; the averages for an elevator building were $128,831 per unit and $109.38 per s/f. This year, in the last 6 months alone, the averages are already up to $153,479 per unit and $178.09 per s/f. Let's look at some other multifamily activity so far this year in Queens: Urban American has so far unloaded 17 buildings consisting of 1,201 residential units and 10 commercial units in 4 separate transactions for a total sales volume of $214.88 million. The buildings were located in Sunnyside, Elmhurst, Jackson Heights, Far Rockaway and Forest Hills. The buyers for these buildings have all been individual investors in New York. The average cap rate for those 4 transactions was an aggressive 4%. The portfolio traded for an average of $209,961 per unit and $238 per s/f. The highest price per unit so far this year has been the sale of 111-32 76th Ave. in Forest Hills. The property is a prewar elevator apartment building consisting of 73 units. It traded for $21.65 million or $296,566 per unit and a record breaking 3% capitalization rate. The largest portfolio transaction was a 7-building, 430 unit package in Sunnyside and Jackson Heights for $88.88 million. Equivalent to $207,000 per unit and a capitalization rate of 4.25%. The largest single elevator building sale was the transfer of 88-15 168th St. in Jamaica for $27.8 million. This building is a 9-story elevator building with 190 residential units. It traded for a 6.12% cap rate and $146,000 per unit. The largest single walk-up building sale was the sale of 40-40 Elbertson St. for $5 million. The property is a 4-story walk-up with 32 residential units. The sales price equates to $156,250 per unit. The highest price per unit and price per s/f walk-up building sale so far this year in Queens, was the sale of a 4-story, 12-unit walk-up at 25-16 18th St. in Astoria. This was an exclusive I handled and sold for $2.685 million or $223,750 per unit and $393.70 per s/f. Why all of this activity at such ferocious price points? The simple answer is "supply and demand." There is a very limited amount of product on the market. When something comes up, there is a feeding frenzy from individual investors to purchase that asset. Of course, low new mortgage and refinance rates for apartment buildings are fueling this rise as well. Banks are still offering 3% rates at 5 year terms for new multifamily loans. The real question for the multifamily market is, just how sustainable is this? Stay tuned. Rubin Isak is the CEO/co-founder of Falco & Isak Realty Services, Queens, N.Y.