The New York-based investment real estate services and advisory firm, Ariel Property Advisors, has released new reports showing sharply rising prices in all types of real estate despite only a modest increase in sales volume. Last year saw a total of 3, 576 transactions in Manhattan, the Bronx, Brooklyn, and Queens, consisting of 5, 039 properties and totaling approximately $69.57 billion in gross consideration.
The 2015 figures represent a small decrease in total transactions from 2014, a modest 3.6 percent increase in total property volume and a whopping 46 percent increase in dollar volume compared to 2014 figures.
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Manhattan south of 96th Street saw a massive $50.2 billion in total dollar volume, a 56 percent increase over 2014, which can partly be credited to several unique trades in Midtown East, which led the borough with $26.197 billion in spending. Transactions like the enormous $2.29 billion sale of 11 Madison Avenue was the largest single building trade in Manhattan since the 2008 acquisition of the General Motors Building and was one of the largest commercial real estate transactions in U.S. history.
“Excluding the $5.5 billion sale of Stuyvesant Town / Peter Cooper Village, the multifamily asset class was extremely dynamic in 2015, with $7.81 billion spent on 296 transactions and 508 properties, which represent a 21 percent increase in dollar volume compared to 2014, ” said Howard Raber, vice president of Ariel Property Advisors.
Meanwhile, Northern Manhattan (north of 96th Street) saw a modest 21 percent decline in dollar volume, a 13 percent decrease in transaction volume and a 13 percent decrease in property sales volume compared to 2014. However, Ariel Property Advisors’ report notes that much of the decline in dollar volume can be attributed to the 2014 sale of the Urban American East Harlem Portfolio for $1.04 billion, which accounted for nearly one third of sales activity in 2014. Without this major outlier, 2015’s dollar volume would have exceeded 2014’s total of $3.21 billion by an increase of 16 percent.
The investment property sales market in the Bronx saw considerable growth in terms of dollar volume and price appreciation in 2015, with 372 transactions consisting of 580 properties totaling approximately $2.767 billion in gross consideration. This represents a significant 16 percent increase in dollar volume despite a modest 4 percent increase in transaction volume and a 2 percent decrease in property volume compared to 2014. Sales activity picked up considerably in the latter half of 2015 as $1.5 billion worth of sales were reported, representing a 30 percent increase over the same period in 2014.
“Several institutional investors and developers have recognized the Bronx for its great potential of untapped growth opportunities, ” said Jason M. Gold, vice president at Ariel Property Advisors. “In 2015, an increased presence of institutional players, which included Extell Development, Vanbarton Group, Savanna and Chetrit Group/Somerset Partners, flocked to the Bronx to execute a variety of projects which will have a long lasting impact on the borough.”
Brooklyn’s investment property sales market had a record year in 2015, with year-end figures showing approximately $9.694 billion in gross consideration, a 52 percent increase in dollar volume from 2014. Propelled by several sizable multifamily and development site transactions, Brooklyn’s investment market saw 1, 409 transactions consisting of 1, 980 properties. Accounting for nearly 28 percent of the submarket’s dollar volume and pushed by a significant number of multifamily trades, Crown Heights, Bedford Stuyvesant, and Bushwick took the lead as some of the most active neighborhoods. The multifamily asset class in Brooklyn saw its strongest year ever as dollar volume increased 43 percent from 2014 levels, hitting $4.8 billion in sales. This increase occurred despite nominal movement in both the number of transactions and properties traded.
“Brooklyn’s multifamily market has captivated the attention of institutional investors and developers and the borough’s high sales volume and price appreciation is a direct result of this interest, ” said Mark Spinelli, vice president at Ariel Property Advisors. “The combination of strong fundamentals and low interest rates have continued to push prices higher with the average price per foot at $328 in 2015, up from $292 in 2014 and the average price per unit at $284, 000 in 2015, up from $268, 000 in 2014.”
Queens’ investment property sales saw strong, steady growth in 2015. Rising market rents, steady growth in condominium prices and several blockbuster commercial transactions continued to support the submarket’s evolution into a premier destination for business, residential development, and capital investment. In 2015, Queens saw 688 transactions consisting of 925 properties totaling approximately $4.38 billion in gross consideration. This translates to a strong 20 percent increase in dollar volume despite a moderate 5 percent decrease in transaction volume and a 2 percent decrease in property sales volume compared to 2014.
“While Long Island City and Astoria continue to be an anchor for the borough, we have recently seen areas like Jamaica and Flushing emerge as a new frontier for public and private investment, ” said Dan Wechsler, vice president at Ariel Property Advisors. “Several rezoning studies slated to be released in 2016, particularly the LIC Core Study Area and The Flushing West Study, will affect large swaths of underutilized and undervalued property.”
Reports conducted by Ariel Property Advisors are available here: http://arielpa.nyc/investor-relations/research-reports
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