Investment Sales Market Thrives Outside Core Manhattan
Brooklyn is the submarket outside of core Manhattan that is performing the best this year. In the third quarter, there was $1.7 billion of investment sales activity in Brooklyn. Through the first three quarters of the year, Brooklyn saw $5.1 billion in sales. If we annualize this total, the marketplace is on pace to achieve $6.8 billion for the year. This figure would shatter all records for Kings County. In 2013, there was just $3.8 billion in sales putting the Brooklyn market on track for a 78 percent increase in dollar volume. This total is also ahead of 2007’s $3.85 billion by 77 percent.
Within Brooklyn, there were 409 properties sold between July and September and a total of 1,516 properties sold over the course of the first nine months. If annualized, the market is on pace for 2,021 sales, 34 percent above last year’s 1,512.
The second strongest submarket outside of core Manhattan is the Bronx where there was $291 million of sales activity in third-quarter 2014. The Bronx has seen $1.55 billion of sales activity through the first three quarters of the year, on pace for $2.05 billion in all of 2014. This figure, while 6 percent below the all-time record of $2.2 billion in 2007, reflects a 44 percent increase above 2013’s $1.4 billion in deals.
A full 448 property sales closed through the first three quarters of 2014, putting it on pace for 598 for the year. The nearly 600 deals would reflect a 47 percent increase over the 2013 total.
Looking at the Queens submarket, there has been $2.25 billion in sales through the first three quarters of the year, on pace for $3 billion. This figure, if realized, would be 27 percent above the $2.4 billion that occurred in 2013 and 16 percent above the previous high of $2.6 billion.
For the first three quarters of the year, there have been 799 properties sold in Queens. If annualized, we expect to see 1,065 properties sold this year. This would be 11 percent below the 1,191 sold in 2006, but would be 34 percent above 2013’s 793.
Lastly, the northern Manhattan submarket has had $1.5 billion in sales thus far this year, on pace for $2 billion for the year. This year would be only about 1 percent below 2013’s $2.03 billion which was an all-time record for this submarket. There were 359 properties sold in northern Manhattan in the first nine months of the year, a pace that would result in 479 for the year. This figure would put the submarket 17 percent above the 409 properties that traded hands in 2013 and would result in an all-time record for northern Manhattan.
As you can see from these statistics, the submarkets outside of core Manhattan are performing extraordinarily well. Based upon the new development that is occurring in these markets and the increased demand from buyers who have not traditionally been interested in properties outside of Manhattan, values here are rising sharply. Demographics continue to change for the better in these markets, stimulating retail demand. Options for workspace in these neighborhoods continue to grow, catalyzed by new demand for this space.
The strength of these thriving submarkets is expected to continue and, as a result, we expect demand to continue to expand in these areas as investors become priced out of Manhattan and realize the strength of these burgeoning areas.
Bob Knakal is the chairman of Massey Knakal Realty Services and has brokered the sale of nearly 1,600 properties having a market value of approximately $11.5 billion.