The Real Deal New York

Brooklyn investment sales stagnate in first half of 2017

Overall transactions down 8% compared to last six months of 2016
By Eddie Small | July 20, 2017 04:00PM

107 Columbia Heights

The Brooklyn investment-sales market remained sluggish during the first six months of 2017, continuing the trend from last year.

The borough saw 570 transactions during the first half of 2017, with 756 properties changing hands totaling $3.58 billion, according to a report from Ariel Property Advisors. Dollar volume dropped by 11 percent from the second half of 2016, while transaction volume dropped by 8 percent, and property volume increased by 1 percent.

The numbers also declined when compared to the first half of 2016, with transaction volume falling by 20 percent, property volume falling by 16 percent and dollar volume falling by 7 percent. Dollar and transaction volume were both at the lowest levels Brooklyn has seen dating back to at least the second half of 2014.

Multifamily properties declined dramatically compared to the second half of 2016, with transaction and dollar volume dropping by 12 and 17 percent, respectively. Ariel Property attributed this largely to higher interest rates and operating expenses. So far, the largest single property multifamily transaction of the year has been a 161-unit building at 107 Columbia Heights, which David Bistricer’s Clipper Equity bought from the Jehovah’s Witnesses in May for $87.5 million.

On the development side, dollar volume fell 41 percent compared to the second half of 2016, while transaction volume dropped by 12 percent. One of the most significant deals occurred at 633-645 Fulton Street and 44-60 Rockwell Place, which Jem Realty sold to the Rabsky Group in May for $68 million. Rabsky can now construct a building spanning 770,000 square feet on the site.

Office properties stood out as a bright spot in the sales market, jumping from $71 million volume in the second half of 2016 to more than $584 million in the first half of 2017. This is largely due to Invesco leaving its stake at the office complex in Dumbo Heights for what The Real Deal reported was around $600 million.

Downtown Brooklyn and Park Slope accounted for almost 42 percent of dollar volume in Brooklyn during the first half of 2017, making them the borough’s most active neighborhoods.

Despite the sluggish numbers, Ariel Property maintained that the outlook was encouraging for Brooklyn development and noted that the passage of 421a in April led to increased demand in May and June.

“Make no bones about it, the investment sales market struggled in the first half of the year, particularly during the first quarter,” Ariel Property Advisors’ Jonathan Berman said in a statement. “Having said that, activity noticeably bounced back during the latter part of the second quarter, indicating the market may have bottomed.”