In Manhattan in the first six months of 2013, there were 274 transactions consisting of 351 properties totaling $10.56 billion in gross consideration, compared to the first half of 2012, which saw 310 transactions comprised of 384 properties totaling $8.199 billion in gross consideration.
“Although much of the year-over-year growth in dollar volume came from a string of institutional, commercial, and office deals, a resurgence of development site sales also played a key role,” said Randy Modell, vice president of Ariel Property Advisors. “Razor thin vacancy levels are driving up rents and condominium prices are rising sharply as buyer demand meets scarce product. Both trends are fueling a tremendous appetite for development site sales throughout Manhattan and are causing prices per buildable square foot to surpass heights achieved during the last cycle.”
Some sites in prime locations are seeing values north of $600 per buildable square foot with one site in West Chelsea selling for as high as $800 per buildable square foot.
“While Manhattan multifamily sales volume dipped in the first half of 2013 compared to the first half and second half of 2012, prices for these properties have risen to the highest levels seen since 2007,” said Shimon Shkury, president of Ariel Property Advisors. “We expect strong pricing to bring more properties to market over the second half, possibly prompting some owners who missed out on the last peak to choose to sell during this cycle.”
First half 2013 statistics showed an expected decline in investment activity for many asset classes from the second half of 2012, which recorded higher than usual volume in response to the expiration of the Bush tax cuts at the end of the year. Compared to 2012’s last two quarters, transactions in the first half of 2013 fell 35 percent, the number of properties sold fell 32 percent, and the dollar volume of the trades fell 17 percent.
Howard Raber, associate vice president for Ariel Property Advisors, added that second quarter 2013 figures improved dramatically compared to the first quarter of 2013. “The lack of inventory in the first quarter following the surge in closings in December, led to pent-up demand,” Mr. Raber said. “Transactions increased in the second quarter, however, when higher-than-average prices encouraged owners to return to the market. We believe this increase in activity will continue for the balance of the year.”