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NYC Investment Sales Activity Slows in 1H16 Following Historic 1H15
August 8, 2016
Citywide consideration and transaction volume decline after remarkable year of activity; office building trades register top sale prices
Activity in the New York City investment sales market settled in the first half of 2016 countering the heightened activity seen throughout 2015’s historic first half, according to the Real Estate Board of New York’s (REBNY) latest Investment Sales Report. Office buildings dominated the highest-priced trades and the Bronx posted the largest increase in sales consideration (monetary value for completed transactions) among the five boroughs from the first half of 2015 to the first half of 2016.
Total sales consideration for commercial, manufacturing and multifamily rental property throughout the five boroughs declined 20 percent to $29.5 billion in the first half of 2016 compared to the first half of 2015. Total citywide transaction volume also slowed 19 percent to 2,581 transactions year-over-year. The average citywide investment sales consideration per half year has totaled $29.6 billion while transactions have averaged 2,604 per half year since REBNY first started tracking investment sales in 2014.
“The moderation of the New York City investment sales market follows an outstanding first half of 2015, which was driven by sky high transactions like the $1.95 billion sale of the Waldorf Astoria,” said John H. Banks, III, REBNY President. “Demand remains robust for core assets throughout the city and top office building sales recorded in the first half of 2016 demonstrate the continued strength of the market.”
Office buildings garnered the largest share of citywide investment sales consideration at 41 percent, or $12.1 billion, in the first half of 2016. The five largest sale prices were for office buildings: the $1.9 billion sale of 787 Seventh Avenue, formerly the AXA Equitable Center; the $1.8 billion sale of 390 Greenwich Street; the $1.4 billion sale of 550 Madison Avenue, The Sony Building; the $1.3 billion sale of 1285 Avenue of the Americas; and the $900 million sale of a 49 percent stake in 1211 Avenue of the Americas, the News Corporation Headquarters.
Breakdown by Borough
The Bronx showed the greatest year-over-year percentage increase in sales consideration rising four percent from $1.50 billion to $1.55 billion, despite its four percent decrease in transactions from 457 to 441. Total Bronx multifamily rental building sales, both elevator and non-elevator properties, comprised more than a quarter of the city’s $7.9 billion multifamily rental consideration in first half of 2016.
Manhattan investment property trading continued to outpace the other boroughs in the first half of 2016 with $21.2 billion in consideration, comprising 72 percent of citywide consideration. However, this was a 22 percentage drop in consideration from the $27.2 billion registered in the first half of 2015. Manhattan transactions declined 28 percent year-over-year from 704 to 508.
The consideration for industrial properties in Manhattan rose a significant 89 percent year-over-year from $92 million to $174 million, while the number of transactions stayed steady, decreasing from six to five. Manhattan accounted for 91 percent of the $1.5 billion citywide hotel sales consideration in the first half of 2016, which declined 64 percent from $4.3 billion in the first half of 2015.
Brooklyn consideration posted a 26 percent year-over-year decrease from $5.7 billion to $4.2 billion as well as a 26 percent decrease in transactions from 1,223 to 901. The borough saw a large 33 percent decrease in consideration for industrial properties and a 40 percent dip in consideration for the sales of garages, gas stations and vacant land in the first half of 2016.
Queens investment sales consideration demonstrated robust performance in the first half of 2016, remaining on par with the first half of 2015 at $2.4 billion. Sales consideration growth in Queens was concentrated in the industrial and “Other” property categories. The number of transactions in Queens declined 11 percent from 644 to 576 year-over-year.
Staten Island consideration recorded the largest year-over-year percentage drop of 35 percent to $186 million, almost $100 million less than the $285 million recorded in the first half of 2015. The borough’s activity declined year-over-year by 12 percent from 176 to 155 transactions.