NYC Investment Sales Volume Up in First Half of 2024

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Mortgage maturities and fresh enthusiasm for development opportunities thanks to government action have put some wind in the sails of New York City’s investment sales market.

The first half of 2024 saw an 11 percent increase in transaction volume and a 23 percent jump in dollar volume compared to the second half of 2023, according to an Ariel Property Advisors report. A lot of that momentum has to do with progress made in Albany with the 485x tax abatement and Mayor Eric Adams’s “City of Yes” zoning changes, the report found.

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“We finally have a housing policy after a few years, that has brought some encouragement and the city also came up with plans to help [office-to-residential] conversions,” Shimon Shkury, founder of Ariel, told Commercial Observer. “You also see users that are buying their own buildings.”

A good amount of that transaction volume happened in the second quarter of 2024, whereas the first was a little on the slow end.

The first half of the year saw $11.48 billion spent across 943 transactions, which included 1,220 individual properties.

“The first quarter of the year in terms of dollar transactions and volume was only $4.4 billion which is very low compared to the past three years — the lowest was $4.1 billion in the third quarter of 2023 when interest rates were really bad,” Shkury said.

Where mortgage maturities were hitting the office market in 2023, they are now impacting the residential market, forcing landlords to seek fresh equity by selling off some or all of their ownership in a property, according to Shkury. Sometimes it’s not exactly a sale, but a refinance.

Shkruy noted that about 25 percent of offices that traded hands in the first half of the year are in for a potential conversion — such as 1740 Broadway, 222 Broadway, 250 Church Street, 175 Pearl Street and 95 Madison Avenue.

A lack of a replacement for the 421a tax abatement has made investors less likely to put money down on multifamily with rent restrictions because interest rates were rising and there was no way to offset the cost of improvements to units. The replacement 485x could potentially change that, he said.

Institutional investments in multifamily accounted for only eight individual deals over $50 million, the second lowest since Ariel began tracking those figures, with only the second half of 2023 being lower. A stark contrast to the overall $3.95 billion across 516 transactions over the first half of the year.

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