Sales  ·  Commercial

2023 Was One of the Stalest Years for NYC Investment Sales Thanks to Interest Rates

High interest rates led the city to see one of the slowest years in the past decade


New York City investors spent much of 2023 keeping their capital to themselves rather than losing it to high interest rates.

The city saw $21.6 billion in investment sales last year, a 41 percent decrease in dollar volume compared to 2022 and one of the worst years in the last 10 years, according to an annual sales report by Ariel Property Advisors.

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Transactions were also down 29 percent year-over-year to 1,904, with the number of buildings sold falling 27 percent, to 2,516 properties, during that same time, the report found. 

“If you look in the rearview mirror, it’s like leaving a disaster zone,” Shimon Shkury, president of Ariel Property Advisors, told Commercial Observer. “If you take out 2020, it is the lowest in the last 10 years [where we’ve seen] average transaction volume about $36 to $37 billion.”

Nearly all asset classes traded well below average in the past decade, the report found. All of this was coupled with constrictions in the construction pipeline.

Yet, hotels and retail sites stayed strong, despite the high borrowing costs, since the city saw from 60 million to 62 million travelers last year, nearly a return to pre-pandemic levels. The city’s migrant crisis at least stabilized demand for hotels with the city scrambling to find temporary lodging for the newcomers. 

Other indicators making those asset classes more desirable is that jobs have recovered to pre-pandemic levels, meaning more people have money to travel and shop.

For hotels and retail properties, transactions by dollar volume hit $4.9 billion in 2023, a 27 percent increase over the $3.9 billion in sales in 2022. And if you compare 2023 to 2021, that equates to a 63 percent jump with $3 billion in trades that year.

On the other hand, multifamily sales were cut in half from 2022 to 2023, with last year having $7.4 billion in sales, a 52 percent decrease from the $15.4 billion the year prior. About $4.3 billion of those transactions in 2023 were market-rate buildings in which rents were not regulated, according to Shkury.

But that’s not to say that the demand is not there.

“Those who sold in 2023 were discretionary sellers, so what will happen if interest rates come down a bit?” Shkury said. “I think that will encourage some sellers to get off the sidelines and actually make a decision to transact as the demand is there.”

Rent-stabilized buildings made up only 17 percent of all multifamily sales in 2023, with the Housing Stability and Tenant Protection Act of 2019 hindering opportunities for landlords to raise the rent on units once they are vacated, discouraging investment in these properties, according to Shkury.

“The regulation coupled with interest rate growth has contributed to a substantial drop in value, 35 to 50 percent,” Shkury said.

Luxury apartments, high-end condominiums and buildings with grandfathered 421a abatements are the properties coaxing investors into taking a leap, Shkury said.

The red-hot industrial market experienced an even longer fall, with $1.1 billion of industrial properties sold in 2023, a 56 percent decrease from the $2.5 billion in 2022 and a 78 percent dive from the $5.1 billion sold in 2021 when demand hit its peak, the report found.

The distressed office market hardly needs any preface, and investors noticed. The city saw only $3.2 billion in sales in 2023, amounting to a 59 percent decrease over the $7.8 billion sold in 2022 and a 39 percent drop from the $5.3 billion in 2021.

But there’s hope. At the end of December, the Federal Reserve kept interest rates stable and forecasted three cuts to them this year. That has plenty in the industry excited, including Shkury, who believes 2024 will inevitably be a better year for real estate transactions thanks to the lower rates.

Mark Hallum can be reached at