Outer Borough Sales Activity Booming
Last week, I recapped the activity in the city’s investment sales market through the first three quarters of the year. The numbers looked impressive, as the dollar volume was $21.75 billion, which, on an annualized basis, comes to about $29 billion this year. If this occurs, we’ll see a 6 percent increase over the $27.4 billion observed in 2011.
We’re anticipating a very busy fourth quarter, which should lead to an annual total between $30 and $32 billion. This total will be about 5 times the $6.1 billion seen in 2009 but will still be only about half of the $62 billion at the peak of the market in 2007.
With regard to the number of properties sold, which is a better indication of market activity, given how impactful a few very large sales can have on dollar volume, there were 2,336 properties transferred in the first three quarters of 2012, already more than the 2,222 that traded all last year. We’re on pace for 3,115 sales this year, which would be a whopping 40 percent increase over 2011 levels.
Notably, in the third quarter, there were 948 properties sold, the highest quarterly total since the first quarter of 2008. We expect more than 1,000 properties to sell in the fourth quarter, which would get us back to peak levels seen in the period between 2005 and 2007, during which 11 of 12 quarters saw more than 1,000 properties sold.
There are several reasons why activity has been so healthy this year, among them the looming threat of capital gains increases, which has brought many properties to market ahead of when they might have without this externality. Another reason is that activity in the outer boroughs has been tremendous. While the Manhattan submarket (defined as south of 96th Street on the East Side and south of 110th Street on the West Side) always leads the city out of downturns (as it did last year), the other submarkets have been performing much better than Manhattan on a relative basis.
Looking at the numbers shows us how well the other submarkets are performing.
Northern Manhattan is clearly leading the way among these submarkets.
Since the first quarter of 2012, sales volume has increased to $551 million, which, if annualized, would lead to $734 million for the year. That level would be more than double the $363 million seen in all of 2011. From the perspective of the number of properties sold, the data is equally impressive. Thus far in 2012, 177 properties have traded hands, already well above the 124 that sold in all of last year. If annualized, this year’s total would lead to 236 for the year, which would represent a 90 percent
increase over last year.