Multifamily Stays Hot in NYC, but Starts to Cool From Record High: Report


New York City’s multifamily market hit $2.87 billion worth of transactions in the first quarter of the year, slowing from the record high of nearly $4 billion in the previous quarter, according to a report from Ariel Property Advisors.

Deal volume in the first quarter still remained higher than the five-year quarterly average of $1.9 billion, buoyed by the massive $837 million purchase of the America Copper Buildings by Black Sprice Management and Orbach Affordable Housing Solution, according to the report.

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Demand continues to grow for luxury residential properties even as interest rates have risen, but Shimon Shkury, president at Ariel, expects dollar volume to continue to slow slightly in the coming year, simply because the value of recent deals was so high. 

“​​I think we’ll [eventually] regress to the average, so to speak,” Shkury said. “But demand for free-market and luxury apartments in the city will continue moving forward in the short term as inflation pushes up rent and as demand exceeds supply for free-market units.”

As buildings in New York City traded for higher-than-average sums, rents ticked up as well, reaching a new high median rental price of $3,700, or just over $80 per square foot. Inventory has sunk to a record low, bringing rents higher than in any period since 2008

However, mortgage rates have also increased, after ​​the Federal Reserve approved a slight rise in interest rates in an attempt to slow inflation, leaving investors to weigh the value of multifamily properties as a way to avoid inflation against the increase in rates.

Shkury said that’s a tough choice since higher interest rates tend to impact rent-stabilized and rent-controlled buildings more than free-market properties because they drive up the costs of labor to renovate those units and those buildings’ landlords can’t raise rents to cover higher mortgage costs.

But Shkury still expects affordable housing to remain attractive to investors, despite deals for affordable properties making up only 5 percent of the first quarter’s total dollar volume, compared to 16 percent in the last quarter of 2021, according to the report. Affordable housing was a particularly popular investment last year, thanks to a landlord’s ability to snag tax incentives, assistance from mission-driven organizations and clarity when it comes to property taxes and other building costs.

“I don’t think that the demand is lower — I think that the demand is as high as it’s been in the past few years,” Shkury said. “I think that the rest of the year will show that.”

New York City isn’t alone with great demand for multifamily buildings — investment in U.S. multifamily properties hit an all-time high last year, at $148.9 billion worth of transactions in the fourth quarter.

Celia Young can be reached at