Multifamily Continues to Lead NYC Investment Sales Growth

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Investment sales dollar volume so far this year remained steadily above the first half of 2021, now at $22 billion across all sectors in New York City.

The latest preliminary numbers from Ariel Property Advisors show that $22 billion was spent on office, retail, industrial and residential assets in the first half of 2022, the third-highest level since 2016 and in line, but slightly down, from the $22.6 billion in volume seen in the second half of 2021. The first half of 2021 only saw $7.8 in investment sales.

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Multifamily housing continued to dominate the market and saw the highest dollar volume in the city.

Shimon Shkury, president and founder of Ariel Property Advisors, said  the current stability in the market stems from improved economic factors — though that could change as fears of a recession mount.

“The market indicators for New York City have been very positive,” Shkury said. “The city’s unemployment went down to 6.2 percent from 10.3 percent the year before, [there’s] a 50 percent increase in subway ridership, office occupancy — although only 42 percent — is double over last year.”

Office investment sales were around $4.7 billion in the first half of 2022, an increase from the $4.2 billion in the second half of 2021 and about $1 billion in the first half of 2021. Industrial investments so far this year came in around $2 billion, a decrease of 53 percent from the $4.3 billion in the second half of 2021, according to the report. It’s still an improvement from the only $713 million sold in the first half of 2021.

Retail and hotel properties have recorded the slowest growth over the last 18 months. Investment sales went from $1.3 billion in the first half of 2021, to $1.6 billion in the second half of 2021 and then $1.9 billion in the first half of 2022, according to Ariel.

Multifamily assets, however, saw the highest investment sales of any sector, according to Ariel. The market saw $8.9 billion in the first half of 2022, compared to the $2.6 billion in the same period in 2021. This was the second-highest six-month period since 2010, according to Shkury.

“Each one of the asset classes recovered fiscally from COVID, but the multifamily market has shown robust activity,” Shkury said. “We should also remember that some of the larger transactions that affected volume this year were in contract last year, so what we’re experiencing is the direct continuation of a robust recovery we experienced in 2021 in the first half of 2022.”

Close to 75 percent of the nearly $9 billion for multifamily was for market-rate housing and housing that still had the 421a tax abatement, which recently lapsed in the state with no replacement in place. Rent-stabilized buildings did not sell as well, and recent rent hikes approved by the Rent Guidelines Board are not expected to be enough to help deals move along, according to Shkury.

Mark Hallum can be reached at mhalllum@commercialobserver.com.