High interest rates brought a long, cold winter to New York City’s investment sales market.
Buyers and sellers traded $5.3 billion in commercial property in the first quarter, a 16 percent decline from the fourth quarter and a 52 percent drop from the same period a year ago, according to Ariel Property Advisors.
That was spread across 481 deals completed in the first three months of the year, an 11 percent quarterly decline and 36 percent drop year over year.
Sales volume declined across multifamily, office and industrial properties, but offices saw the steepest decline. The quarter’s $470 million in office investment represented a 55 percent decrease from the fourth quarter and an 85 percent drop from the first quarter last year. While 17 different deals for office buildings closed in the first quarter, a slight uptick from the fourth quarter, the number of transactions was down 54 percent year over year.
The multifamily market netted $2.1 billion in dollar volume last quarter, a 33 percent decline from the fourth quarter and 39 percent annual drop. There were 268 deals recorded for multifamily properties, a 17 percent decline from the fourth quarter and 35 percent fall from last year.
The market for development sites cooled off as well. The asset class saw about $968 million in dollar volume last quarter, down 17 percent from the fourth quarter and 58 percent from last year. There were 69 deals for development properties in the first quarter, a decline of 13 percent quarter-over-quarter decrease and 41 percent year-over-year.
One relatively active area of the market was in industrial sites. About $388 million in land deals was recorded last quarter, a 36 percent increase over the fourth quarter. However, that figure was down 43 percent from a year ago, when industrial properties were about as hot as they have ever been.
That 54 deals for industrial sites in the quarter represented an 18 percent increase from the fourth quarter but an 11 percent decline year-over-year.
Ariel Property Advisors’ Shimon Shkury said dealmaking could pick back up in the second half of the year as maturing loans force some property owners to sell to avoid foreclosure.
“As we look ahead, we anticipate that mortgage maturities will become a catalyst for significant transactions … ushering in a new wave of opportunities for sophisticated investors,” Shkury said.
Correction: Because of an error in the initial report, an earlier version of this story misstated the data for sales of industrial and development sites.
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