Lack of big deals leads to slow year in Northern Manhattan

Market in 2017 largely consisted of sales under $50M

558-560 West 184th Street and a rendering of 223-235 St. Nicholas Avenue
558-560 West 184th Street and a rendering of 223-235 St. Nicholas Avenue

A dearth of large deals in Northern Manhattan was one of the most significant factors behind a slow year for the submarket, according to a new report from Ariel Property Advisors.

The section of Manhattan above East 96th and West 110th Streets saw just two multifamily transactions in 2017 that were at or above $95 million, while the rest of the market was entirely comprised of deals below $50 million. In 2016, by contrast, there were seven transactions worth more than $100 million.

The two deals at or above $95 million were AvalonBay Communities’ $95 million purchase of the fee interest at 1 Morningside Drive and Blackstone Group’s $244 million purchase of Harvard Management Company’s majority stake in its 13-building portfolio, which included buildings in Northern Manhattan.

Other major deals included Sugar Hill Capital’s $41 million purchase of 200 Haven Avenue in Washington Heights and Fairbridge Properties’ roughly $30.6 million purchase of 4055 10th Avenue in Inwood.

Overall, dollar volume in Northern Manhattan dropped by 46 percent to $1.94 billion, while transaction volume dropped by 14 percent to 254, according to the report. The number of buildings that traded also dropped by 29 percent to 314 last year.

Washington Heights saw the most activity in Northern Manhattan by dollar volume, with 25 percent of the pie. Central Harlem saw the most activity by transaction volume at 36 percent.

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Despite the lack of large deals, multifamily properties still accounted for 76 percent of dollar volume and 47 percent of transaction volume in 2017, according to the report. But compared to 2016, dollar volume for multifamily properties dropped 46 percent to $1.47 billion, and transaction volume dropped 21 percent to 120.

Mirroring the overall New York City market, pricing for multifamily properties in Northern Manhattan was still robust, with the average price per square foot rising 5.8 percent to $382, and the average price per unit rising 2 percent to $320,729.

Pricing was weaker for development assets, with the average price per buildable square foot dropping 8 percent to $209. Dollar volume in this category also dropped year-over-year by 64 percent to $173 million, and transaction volume dropped by 20 percent to 32.

Northern Manhattan’s commercial market struggled in 2017 as well, with dollar volume dropping by 61 percent to $42 million and property volume dropping by 17 percent to five.

The biggest development deal in 2017 for Northern Manhattan was the sale of 223-235 Saint Nicholas Avenue, a distressed site that sold for $48.6 million. Another large sale took place in East Harlem, where 110 East 125th Street and 1801 Park Avenue sold for $18.15 million, and Ariel predicts that the neighborhood’s recent rezoning could provide a boost for development moving forward