Hefty rise in Manhattan investment property sales in 2013

February 04, 2014 12:00PM

Investment property sales netted a healthy volume in 2013, despite a downturn in the number of properties sold.

Manhattan saw a total of 672 transactions comprising 852 properties in 2013, a slight decline from the 765 transactions composed of 935 properties in 2012, according to Ariel Property Advisors’ 2013 Manhattan Investment Property Sales report. Dollar volume for the year came in slightly north of $27 billion in gross consideration. That’s a 23 percent increase from 2012, when volume totaled $21.8 billion.

“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,” Randy Modell of Ariel Property Advisors said in a release. “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.”

Multifamily sales were particularly strong in 2013, accounting for 41 percent of Manhattan’s investment property transaction volume and 25 percent of its dollar volume, according to the report. A total of 276 multifamily transactions comprised of 391 buildings changed hands in 2013, totaling $6.63 billion in gross consideration. Bolstered by rising rents and low interest rates, the average capitalization rate for multifamily buildings was down to 4.36 percent, up from 4.68 percent in 2012. The average price per square foot jumpted to $648 from $560 in 2012, and the average gross rent multiple was up to 15.6 from 13.74 in 2012.

Manhattan development sites saw a 79 percent increase in total dollar volume over 2012, the biggest jump among all asset classes, hitting $4.9 billion gross consideration. The biggest cluster of development site transactions were in Chelsea, with 12 such deals, and Soho, with 10. The sale of Michael Shvo’s 239 10th Avenue which went for more than $800 per square foot, and 55-61 West 17th Street, which bagged $744 per buildable square foot, were among the notable examples.

The office market also saw a jump in dollar volume, up 52 percent to $12.19 billion in gross consideration in 2013 from $6 billion in 2012.Transaction volume took a 25 percent dip and property volume fell 27 percent, but the high dollar volume reflects transactions with institutional investors, Such As 650 Madison Avenue, which traded for $1.3 billion. — Julie Strickland