Rent law “shutting down” I-sales market
July is almost always a sluggish month for real estate deals in New York, but even by that standard, this was an extremely slow July.
The city saw about $357 million worth of apartment building deals across 31 properties in July, according to data from Real Capital Analytics. In July 2018, the market saw about $771 million worth of activity across 50 deals, and in July 2017, it saw about $671 million across 57 deals.
“July is always a weak month anyway in terms of dollar volume because it’s July. People are starting to go out on vacation,” said RCA senior vice president Jim Costello, who added that it fell significantly from July 2018 and July 2017.
Dollar and sales volume in July also plummeted compared to June, when the city saw about $806 million worth of deals across 51 properties.
Overall, July’s dollar volume is the lowest New York has seen since at least January 2017, according to RCA.
Observers pointed to the strict new rent laws the state passed in June as the main reason for the slowdown. Investors are still trying to figure out what moves make economic sense under the new regulations, and until they do that, the multifamily market will continue to be slow, he said.
The new rent regulations are “beginning to shut down investment” in New York real estate, Costello said.
New York’s multifamily market had been moribund leading into July. The city saw about $3.4 billion worth of sales across 238 buildings and 169 deals from January through June, marking the slowest first half of the year since 2011, according to data from Ariel Property Advisors.
Brokers described July’s low numbers as an inevitable consequence of the state’s new rent law, which greatly limits the profits multifamily investors can reap on stabilized properties.
“I’m not surprised,” Rosewood Realty’s Aaron Jungreis said. “I think for August, it might even be a little lower.”
Jungreis said the slowdown would eventually abate, as sellers are already starting to lower their prices, which should help activity pick back up. — Eddie Small
Apple shops for big NYC space
The tech company is looking around Manhattan for somewhere between 200,000 and 500,000 square feet for a new office, sources told The Real Deal. One source said the tech firm could take as much as 750,000 square feet.
Apple has checked out the usual suspects of properties on the short list for most companies with assignments of that size, including the Related Companies and Oxford Properties Group’s 50 Hudson Yards, Related and Vornado Realty Trust’s Farley Post Office redevelopment and SL Green Realty’s One Madison Avenue, sources said.
A JLL team led by Martin “Mack” Horner and Peter Riguardi has the assignment to conduct the search, according to a source.
Apple is the last of the big FAANG tech companies (Facebook, Amazon, Apple, Netflix, Google) to scale up to a significant size in New York City. But to the city’s office landlords and leasing brokers, the move seemed inevitable: As the availability of office space and workforce talent grows ever tighter in Silicon Valley, these companies would naturally look to expand to tech hubs like New York.
Facebook, Google and Amazon each already has a significant presence in the city with offices that take up several hundred thousand square feet each. And they’re all competing with one another for the choicest properties — sometimes bumping their rivals.
Facebook is reportedly in talks to lease as much as 1.5 million square feet at 50 Hudson Yards, and Google recently finalized a 1.8 million-square -foot lease with Oxford Properties at its redevelopment of the St. John’s Terminal in Hudson Square. Amazon is reportedly in discussions to lease 400,000 square feet in the Hudson Yards neighborhood at SL Green’s 460 West 34th Street.
Netflix, meanwhile, recently leased 100,000 square feet in the Flatiron District for offices at Normandy Real Estate Partners’ 888 Broadway and 161,000 square feet at 333 Johnson Avenue in Bushwick, Brooklyn, for sound stages.
Apple currently leases about 45,000 square feet in the Flatiron District at Clarion Partners’ 100-104 Fifth Avenue — where it opened its office in 2011. — Eddie Small and Rich Bockmann