Slate Property Group is in contract to buy 600 Columbus Avenue, a 166-unit rental building on the Upper West Side, for $120 million, The Real Deal has learned.
Multifamily transactions in New York have slowed precipitously as rising interest rates clash with sellers unwilling to cut prices. Investment in Manhattan apartment buildings slipped 23 percent by dollar volume from the first half of last year to the second half as the cost of debt spiked. And experts say deals could slow further this year.
Slate, led by David Schwartz and Martin Nussbaum, appears to have sidestepped that bottleneck. Its purchase price for 600 Columbus Avenue, coupled with the building’s age and market-rate makeup, mean the investor might have nabbed a steal.
A source familiar with the sale said the building’s 166 units are a mix of market rate and rent-stabilized apartments. But property tax records and the rent guidelines board’s list of stabilized buildings doesn’t count 600 Columbus among the city’s rent-regulated properties.
If the building is mostly free-market, the $120 million or $684 per square foot Slate agreed to pay is a discount on the average $810 per square foot investors paid for free-market buildings last year, according to an Ariel Property Advisors report.
JLL’s Bob Knakal, Jon Hageman and Hall Oster, who brokered the deal, declined to comment. A spokesperson for Slate did not immediately comment on what drew the developer to the property.
A concentration of unregulated units would give Slate the runway to renovate and reprice them. The building between West 89th and 90th streets went up in the mid-1980s and property records indicate it hasn’t changed hands since. It’s unclear whether its owner, a firm connected to the developer and former politician Jerome Kretchner, has made substantial renovations since.
As it stands, one-bedrooms in the doorman building fetch about $4,000 per month. In January, the median price of a Manhattan apartment was $4,097, over 13 percent higher than prices last January and just about $50 shy of the record posted in July.
And while rents nationally have begun to see year-over-year declines, experts say New York is an outlier in that they expect this level of annualized growth to hold for the next few months.
“This is just where we’re going to be,” said Hal Gavzie, leasing director at Douglas Elliman.
Despite the market slowdown in the second-half of 2022, Slate was one of the most active multifamily firms in the city. The developer ranked tenth on Ariel Property Advisors’ list of the year’s top buyers by dollars spent, with over $185 million.
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