NYC multifamily market slides 60% to $1.6B in Q1: report

Trump bump froze contracts late last year as mortgage rates climbed

Apr.April 28, 2017 08:00 AM
New York City’s multifamily market slumped through the first quarter following last year’s Trump bump.

Total dollar volumes fell 60 percent year-over-year to $1.6 billion during the first quarter as fewer deals materialized late last year amid uncertainty surrounding the presidential election, according to a new quarterly report from Ariel Property Advisors.

That was the lowest sales total for a quarter since the beginning of 2013, and a sharper decline of 51 percent in the city’s overall investment sales market that Cushman & Wakefield reported earlier this month.

“The market in general took a pause as of November,” Ariel Property Advisors’ Shimon Shkury told The Real Deal. “The 10-year yield went up drastically the week after the elections, and that actually put a pause on everything out there. Every contract that was out there and was supposed to be financed got put on hold because the banks quoted them at a more expensive rate.”

Transaction volume fell 35 percent year-over-year to 117 deals. But even more striking, the market saw no sales above $100 million during the first three months of the year, compared to 11 sales during the same time last year.

Pricing was a mixed bag, with deals in the Bronx leading appreciation. The borough saw the price per unit grow a little more than 10 percent to about $167,000. Total dollar volume declined 52 percent to $275 million.

Northern Manhattan also saw price appreciation with the price per unit rising about 5 percent on the year to $298,000, as did Queens, where the price per unit rose more than 12 percent to about $290,000.

Dollar volumes in Northern Manhattan fell 66 percent year-over-year to nearly $195 million, and in Queens the total dollar volume of sales fell 46.5 percent to $220 million.

Queens saw the largest deal of the quarter: Pinnacle Group’s purchase of a pair of elevator buildings in Flushing from Treetop Development for $57.6 million. The properties, at 132-40 and 133-17 Sanford Avenue, traded for a little more than $318 per unit.

On the flip side of the pricing coin, Manhattan and Brooklyn saw values decline. In Manhattan, the price per unit slid nearly 2.5 percent to about $690,000, while in Brooklyn pricing dropped around 13 percent to roughly $294 per unit.

Dollar volumes in Manhattan fell 69 percent on the year to $512.6 million, and in Brooklyn by 52 percent to almost $398 million.

Shkury, meanwhile, said brighter days are ahead, as uncertainty has subsided and 10-year yields come down.

“For the balance of the year, we’ll probably be seeing more activity, more capital and probably the banks pricing mortgages down rather than up,” he said.

(To view a five year break down on condo development, click here)

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