Multifamily rebound rules NYC investment sales market

Sector’s dollar volume rose 77% from second quarter

New York /
Oct.October 29, 2021 10:16 AM
From left: Gaia Real Estate CEO Danny Fishman with 50-58 East Third Street and A&E’s James Patchett, 400 East 57th Street (LinkedIn, Google Maps, A&E)

From left: Gaia Real Estate CEO Danny Fishman with 50-58 East Third Street and A&E’s James Patchett, 400 East 57th Street (LinkedIn, Google Maps, A&E)

Multifamily properties kept New York City’s investment sales market humming in the third quarter.

Out of 498 deals in the third quarter, 281 — totaling $3.2 billion — involved apartment buildings, according to Ariel Property Advisors’ quarterly investment sales report.

The multifamily sector’s dollar volume has more than tripled from a year ago and risen 77 percent from the second quarter. The sector’s uptick is mostly responsible for the quarter-over-quarter increase of the entire investment sales market of about $6.5 billion, up 13 percent compared to the second quarter and up 64 percent from a year ago.

The boost in multifamily sales is partly attributed to the quick recovery in market-rate apartments from the pandemic, when renters stayed away from the city’s crowded environment.

“What happened in 2021, and at the tail end of 2020, is that rent actually started to climb back up again,” said Ariel’s President Shimon Shkury. “From a free-market perspective, units have lower vacancy and less concessions. Rents are starting to climb up in some cases — not all cases — to even higher than where they were in pre-Covid.”

The market-rate apartment building transactions in the third quarter included A&E Real Estate’s acquisition of SL Green’s 41 percent stake in the 261-unit apartment building at 400 East 57th Street in a deal valuing the Sutton Place property at $133.5 million.

Danny Fishman’s Gaia Real Estate also picked up a 71-unit rental apartment complex at 50-58 East Third Street in the East Village for $49.5 million from Steven Gorey’s Anbau Enterprises.

Government-subsidized affordable housing properties, which became investors’ favorite in the pandemic-driven downturn because of their revenue certainty, also pushed up the multifamily transaction volume.

Phoenix Realty Group, a New York-based multifamily developer and investor, acquired a 469-unit Section 8 complex, called Academy Gardens, in the South Bronx for $91 million from Joel Gluck’s Spencer Equity.

The trend is expected to continue, Shkury said, as family offices, high net worth individuals, institutional investors, mission driven organizations and even sovereign wealth funds have joined the pool of investors in affordable housing properties.

In contrast to the multifamily sector’s rebound, offices still have a long road to recovery. The total transaction volume in the third quarter was $555.8 million, down 43 percent from the second quarter, and down 44 percent from a year ago.

Offices are the only property type that saw a year-over-year decline in the transaction dollar volume, with only 15 office transactions recorded in the third quarter.

But some investors took advantage of the office market’s down-cycle in the third quarter. An undisclosed Asian buyer acquired a nearly 80,000-square-foot, 12-story building at 576 Fifth Avenue in the Diamond District for $101 million. The seller, Severn Realty Partners first placed it on the market in October 2020, asking $113 million.

Empire Capital Holdings was another deal-seeker. In partnership with Namdar Realty Group, the firm acquired a less-than-half-occupied, 212,000-square-foot office building at 345 Seventh Avenue in Chelsea and three other smaller properties for total $107 million. The seller was Clemons Management.





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