The Boroughs and Building Sales
This is the final installment in a three-part series looking at the New York City building sales market in 2009. The first provided an overview of the entire market (excluding Staten Island), and the second analyzed sales activity in Manhattan, separating the borough along East 96th Street and West 110th Street.
Today, we will take a look at 2009 sales activity in the Bronx, Brooklyn and Queens. Interestingly, of the 164,876 properties in our statistical sample, 79 percent are located outside of Manhattan. Although sales outside of Manhattan account for only 28 percent of total dollar volume, the 1,025 properties that changed hands in the boroughs in 2009 represent 71 percent of the 1,439 total properties sold. For reference purposes, all of our statistics pertain to sales over $500,000. It is important to note, too, that capitalization rates and gross rent multiples vary widely based upon many factors, and numbers presented here are simply averages.
In 2009, there were $400 million of building sales activity in the Bronx. This figure was down 56 percent from the $920 million of sales in 2008, and down 82 percent from the $2.2 billion achieved in 2007. Of this $400 million in sales, 60 percent was in the multifamily sector and a surprising 14 percent was in the industrial sector.
There were 202 properties sold in the Bronx in 2009. This figure was down 51 percent from the 409 in 2008 and down 71 percent from the 701 sales in 2007. These 202 sales represent a 0.94 percent turnover rate of the 21,376 properties in the submarket. Volume had hit a peak in 2007 at 3.28 percent.
The average price of a property sold in the Bronx in 2009 was $2 million. This was down 9 percent from the $2.2 million average in 2008 and down 35 percent from the $3.1 million average in 2007.
Capitalization rates on walk-up apartment buildings averaged 7.87 percent, up 47 basis points from the low; and gross rent multiples averaged 6.76, down 1.24 multiples from the peak. Elevator properties saw average cap rates of 8.1 percent, up 210 basis points from the low, and the average gross rent multiple dropped to 6.57, down 2.03 multiples from the peak. The GRM’s in the Bronx are the lowest in the city. Mixed-use properties had an average cap rate of 9.1 percent.
On a price per square foot basis, walk-up buildings averaged $82 per square foot, down 38.4 percent from their peak. Elevator properties averaged $68 per square foot, down 19.1 percent from the peak, and mixed-use properties averaged $142 per square foot, down 40 percent from their peak.
As mentioned, the industrial sector in the Bronx was very active, with 31 sales averaging $178 per square foot. Retail properties saw 22 sales with an average price per square foot of $343.
The development market in the Bronx was more active than the Manhattan market. Here there were 17 sales for a total footage of approximately 760,000 buildable square feet. The average price per buildable square foot was $39 and most of these properties were acquired by affordable-housing developers.
There were two office buildings sold in the submarket for an average price of $113 per square foot. Specialty-use sales (those purchased by nonprofit groups, foreign governments, schools or foundations) averaged $161 per square foot.
In 2009, building sales volume in Brooklyn reached $796 million. This was down 61 percent from the $2 billion in sales in 2008, and down 79 percent from the $3.85 billion in 2007. Thirty-one percent of this activity was in the multifamily sector, with 20 percent in specialty use and 15 percent in the industrial sector.
There were 478 properties sold in Brooklyn in 2009. This figure was down 57 percent from the 1,108 properties sold in 2008, and down 75 percent from a peak of 1,916 properties sold in 2006. The 478 properties sold represented a 0.73 percent turnover rate of the 65,919 properties in Brooklyn. This was the lowest turnover rate in any of the submarkets in New York City.
The average price of a building sold was $1.7 million (tied with Queens for the lowest average). This figure was down 6 percent from the $1.8 million average in 2008 and down 19 percent from the $2.1 million average in 2007.
Capitalization rates for walk-up properties averaged 7.64 percent, up 164 basis points from the low. Gross rent multiples for walk-ups averaged 9.58, a drop of 0.62 multiples. Elevator properties had a cap rate average of 6.41 percent, an increase of 201 basis points from the low. Gross rent multiples here were 8.66, down 2.25 multiples from the peak.
Mixed-use properties had average cap rates of 7.24 percent, up 104 basis points from the low.
Our price-per-square-foot analysis shows that walk-up buildings averaged $148 per foot, a drop of 21.7 percent from the peak. Elevator buildings averaged $107 per square foot, down 5.3 percent from their peak. Mixed-use properties averaged $236 dollars per square foot, down 10.3 percent from their peak.
Value, on a price per-square-foot basis, held up better in Brooklyn than in any other submarket in the city. Based upon Brooklyn having the lowest turnover and the lowest reduction in value, it appears that sellers were more discriminating there than in other markets.
In 2009, the average price per square foot for the 59 industrial properties sold was $160, and the retail sector saw average property values of $349 per square foot. The development market in Brooklyn was relatively active with 31 sites changing hands at an average price of $113 per buildable square foot. The total buildable footage of all 31 sites combined was, however, a mere 613,000 square feet.
In 2009, the dollar volume of sales in the Queens submarket was $586 million. This figure was down 69 percent from the $1.9 billion in 2008, and down 77 percent from the $2.6 billion in 2006. Industrial properties made up the largest percentage of sales in the Queens submarket at 26 percent.
There were 345 properties sold in Queens in 2009. This total was 59 percent lower than the 846 sold in 2008, and 71 percent below the 2006 total of 1191. The 345 properties represented 0.79 percent of the 43,765 properties in the Queens submarket.