2021 NYC Investment Sales Report

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Investment Sales Surged in 2021

Wide Array of Asset Types Fuel Rally

Investors displayed renewed appetite for commercial properties across New York City during 2021.

  • Sales volume surged by 58.1%, rising from $24.6 billion in 2020 to $38.5 billion in 2021.
  • During the year 3,776 transactions were completed, 45.3% more than the 2,599 sales in 2020.
  • While the number of sales was the most since 2017, the total consideration fell well short of the $45.1 billion in total consideration in 2019.

 

The rally paralleled the surge in residential sales, but the increase was more restrained. Residential sales volume (total consideration) pushed to a new record of more than $54 billion – exceeding the prior high water mark of $49.9 billion in 2017.

Commercial property sales still fell well short of the watershed mark of $57.6 billion sold in 2016. More than 100 sales over $100 million were completed in 2016. In comparison, 62 sales exceeding $100 million occurred in 2021. Nevertheless, this represented a positive gain from the 46 sales over $100 million in 2020.

Multi-Family Sector Captures Largest Market Share

Prior to the pandemic the office sector overshadowed other asset classes; between 2016 and 2019, office sales generally accounted for at least one-third of the total consideration. In 2020 and again in 2021, the office sector captured less than 30% of sales volume.

Pre-pandemic, the multi-family sector generally followed second behind the office sector, accounting for about 20% of market share in most years. Throughout most of the pandemic, multi-family provided steady cash flow as well as a deep inventory of properties for buyers to consider. The multi-family sector maintained its preferential status during 2021, capturing 31% of total consideration with more than $12 billion in sales volume.

Retail Property Sales Fall in Manhattan

Investors still displayed caution during 2021. The investment sales market is far from the brisk bidding environment that prevailed from 2016 to 2018, when some claimed money was chasing assets. Nevertheless, nearly every property type registered an increase in total sales volume during 2021.

Retail was the notable exception – the number of retail transactions jumped from 424 to 520, but total consideration was flat, inching up by only 3.0% from $3.3 billion to $3.4 billion. Manhattan’s retail sector is still adjusting to subpar tourism and the delayed return of workers to office districts. Total consideration for retail properties fell by 19.5% to $1.6 billion in Manhattan but rose by 37.9% in all boroughs outside of Manhattan. Brooklyn’s retail sector led the charge, rising by 47.9% to $835 million in 2021.

Niche Sectors Also Surged

Other asset classes such as logistics/distribution, life sciences and self-storage are in much shorter supply and continue to capture high prices. In the top sale of 2021, StorageMart paid $3.1 billion for Manhattan Mini Storage’s 18-building self-storage portfolio. The sale is a testament to the relatively recession-proof self-storage sector. One of the other $1-billion-plus transactions involved consolidation of ownership stakes in Starrett City. The 46-building project is New York City’s largest Mitchell-Lama multi-family property.

Other niche asset sales included the $600-million sale of Kaufman Astoria Studios, and a $509 million purchase of a 75% stake in the observatory tower at the Edge. The surge in residential sales made it clear that people are still drawn to all that living in New York City offers. Rebounding commercial property sales indicate renewed confidence among investors that the long-term rewards of ownership outweigh the risks and costs of ownership. The market attracted many first-time investors, but a significant number of the $100 million plus transactions involved the region’s top owners doubling down on the portfolio diversification strategies that were emerging prior to the pandemic.