Bronx multifamily pricing rose 13% in 2016: report
Despite price growth, transaction indicators fell for the year
Price gains for multifamily properties in the Bronx climbed higher in 2016 than any submarket in the city outside of Queens. But after years of surging growth, sales volumes turned south last year as investors pulled back on the throttle, according to a new year-end report from Ariel Property Advisors.
Overall, Bronx multifamily pricing metrics increased 13 percent on the year as buyers searched for relative affordability. The price per unit rose 19 percent to $163,290 per unit, and price per square foot ended the year at $184 per square foot, a jump of 15 percent.
Capitalization rates compressed 36 basis points to 5.19 percent and gross rent multipliers rose 111 points to 11.06.
Yet while pricing grew, transaction indicators dropped – a sign of a market in transition as sellers and buyers disagree on the value of assets.
The number of transactions dropped 11 percent on the year to 203 deals, while the number of properties traded fell 7 percent to 317. The total dollar volume of traded multifamily properties came down 16 percent to $1.47 billion.
York Equities, a group of investors led by Emerald Equity Group’s Isaac Kassirer, and Jordan Slone’s Harbor Group International notched the borough’s priciest deal when they laid out $140 million in March to buy a 38-building portfolio dubbed the “Bronx 1000.”
The 935-unit, rent-stabilized apartment package was the priciest trade the borough had seen since 2013.
Black Spruce Management also inked a big deal in February when it bought 1511 Sheridan Avenue for $34.7 million, a 45 percent price increase from property’s previous sales price of $24 million in 2015.
New investors entered the market for the first time such as David Lichtenstein’s Lightstone Group, which picked up a 56-unit rental building at 1011 Carroll Place for $11 million.
And while the deal has yet to close, Joseph Sitt’s Thor Equities signed a contract last year to buy a 280,000-square-foot West Bronx rental building for $42.5 million, which would be the investor’s first purchase in the borough.
Ariel Property’s reported noted that the Bronx faces more uncertainty in 2017 with financing costs projected to rise with climbing interest rates, an increase of new supply and a stronger dollar. Demand, however, should remain strong in the near term with unemployment continuing to decline, infrastructure improvements and the ripple effect from the planned 18-month L Train shutdown in 2019.