Regulatory Environment Creating New Opportunities in the Multifamily Market

    Avison Young’s Tri-State Investment Sales Team

    Marketing 35 Buildings with 815 Units Totaling 580,000 square feet

    Increased regulations governing rent regulated properties are resulting in new opportunities for buyers and sellers in the multifamily market, according to James Nelson, Principal and Head of Avison Young’s Tri-State Investment Sales team.

    “We’re finding that in this tougher regulatory environment, many smaller, “mom and pop” owners who have owned properties for decades are now ready to sell due to the increased management burden,” Nelson said. “At the same time, larger, private and institutional investors with more management resources are entering the market looking for product.”

    Nelson said this trend is evident in the number of exclusive multifamily listings Avison Young’s Tri-State Investment Sales team has signed.

    “The Tri-State Investment Sales team is marketing 35 multifamily properties with 815 units across 580,000 square feet throughout New York City,” Nelson said. “Many of these buildings are part of portfolios that have been owned and managed by the same private investors for decades.”

    The offerings include:

    • The Central Brooklyn Portfolio, comprised of nine buildings with 212 units and totaling 182,490 gross square feet in Crown Heights, Prospect Lefferts Gardens, Prospect Park South, Bedford-Stuyvesant and Bushwick, which is on the market for $70 million. Nelson and Associate Directors Fritz Richter and Sam Schertz and Associates Joseph Rosenfeld and Allan Fries are marketing the portfolio.
    • Three residential buildings 344, 346 and 348 East 62nd Street in the Lenox Hill neighborhood of Manhattan featuring 40,612 total gross square feet across 72 units—two retail units and 70 residential units that offer substantial rental upside—with an asking price of $40 million. Nelson and Directors Brandon Polakoff and David Shalom, Associate Director Eric Karmitz and Associates Phil Bowman and Bradley Rothschild are marketing the package.
    • A historic, five-story, mixed-use building at 115 South Street in the South Street Seaport historic district of Manhattan, featuring a vacant penthouse unit perfect for an investor-user. Nelson and Director Erik Edeen and Associates Phil Bowman and Bradley Rothschild are marketing the building.
    • All of Avison Young’s Tri-State Investment Sales team’s multifamily listings are available here https://www.aytristateinvestmentsales.com/en_US/.

    Nelson noted that increased marketing activity, particularly in Brooklyn, is reflected in the 3Q18 New York City Multifamily Sales Report produced by Analyst Ethan Bidna in the Tri-State Investment Sales Group.

    The report showed that in the third quarter alone, New York City saw multifamily transactions with a dollar volume of $2.5 billion.

    Brooklyn continued to dominate activity in the multifamily market in the third quarter accounting for 30 percent of the city’s multifamily transactions and 25 percent of the dollar volume, the report showed.

    In Downtown and North Brooklyn, third quarter pricing rose above an average $600 per square foot, nearing or exceeding many multifamily sales in Manhattan. Borough-wide, cap rates ranged from 2.67 percent to 5.9 percent and averaged 4.6 percent, the report showed.

    Core Manhattan accounted for 23 percent of the multifamily transactions and 52 percent of the dollar volume in the third quarter, according to the report. Pricing remained strong at $970 per square foot or a 3.67 percent cap rate.

    The Bronx was the third most active submarket in the third quarter, capturing 22 percent of the city’s multifamily transaction volume and 11 percent of the dollar volume. Cap rates for the borough averaged 5.08 percent.

    The report includes sales comps for properties in core Manhattan, Upper Manhattan, Brooklyn, the Bronx and Queens and highlights the price per unit, price per square foot and cap rate for the sales.

    To review the 3Q18 New York City Multifamily Sales Report, please click here. The methodology used for the report is above $2 million were listed for all of boroughs except Manhattan where only properties $5 million were listed.


    Photo captions

    Central Brooklyn Portfolio

    344, 346 and 348 East 62nd Street

    115 South Street

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