Northern Manhattan and Brooklyn are
leading gains in New York City commercial-property deals this
year as apartment buildings in the areas attract investors,
brokerage Massey Knakal Realty Services said today.
Sales of properties in upper Manhattan — above 96th Street
on the east side and 110th Street on the west — totaled $441
million in the first half, triple the number for the same period
in 2011, the New York-based firm said in a report. Brooklyn
transactions rose 60 percent to $1.53 billion. For the entire
city, deals climbed 14 percent to $14.4 billion.
“Northern Manhattan has been on fire,” Paul Massey,
Massey Knakal chief executive officer and founding partner, said
at a briefing for reporters. Almost 3.4% of the properties in
the market changed hands during the first half, the most of any
section of the city and the highest percentage in five years.
Real estate buyers are turning to apartments in upper
Manhattan and Brooklyn as prices stagnate for offices, the
biggest portion of the market. Office values in Manhattan have
remained at about the same level since the middle of last year,
Newport Beach, California-based Green Street Advisors Inc. said
in a July 6 report.
Apartment buildings, in contrast, have had declining
capitalization rates — a measure of return on investment that
falls as prices rise — over the last four quarters in both
Brooklyn and northern Manhattan, Massey Knakal said. Almost $300
million, or 68 percent, of upper Manhattan sales in the first
half were for elevator or walk-up apartments. Such properties
accounted for about half of deals in Brooklyn.
Local Investors
Sales in upper Manhattan — primarily the Harlem,
Washington Heights and Inwood neighborhoods — are rising in
part because major investors such as AREA Property Partners LP
are selling real estate they acquired near the market’s peak
five years ago, said Robert Shapiro, first vice president for
sales at Massey Knakal.
“Institutional investors who bought during the peak in
2006 and 2007 are now being forced to take their medicine,” he
said. “We’re seeing a return of the local mom-and-pop investors
who’d been on the sidelines now being able to scoop these
property back up.”
AREA Deals
AREA, the New York-based private-equity firm led by
investor William Mack, sold 3915 and 4455 Broadway in June for a
combined $15.7 million to Alma Realty, a Long Island City, New
York, firm led by Efstathios Valiotis, according to data
compiled by Real Capital Analytics Inc. Those were part of a
group of northern Manhattan properties AREA and partner Vantage
Properties LLC sold last month, including the 1,800-unit Savoy
Park apartment complex in Harlem.
Valiotis, which Shapiro described as a “local operator,”
has acquired close to $100 million of upper Manhattan properties
in the last 18 months, he said.
Most of Manhattan’s 130 multifamily property sales in the
second quarter were in upper Manhattan, where prices tend to be
lower than in other parts of the city, according to a separate
report from brokerage Eastern Consolidated. The average sale
price fell to $380 a square foot from $440 in the first quarter,
according to the New York-based company.
Eastern Consolidated agents brokered the deal between the
AREA partnership and Valiotis.
Williamsburg, Greenpoint
Brooklyn is also seeing a disproportionate interest in
development sites, accounting for about 17 percent of deals. Of
that amount, about three-quarters is concentrated in
Williamsburg, Greenpoint and downtown Brooklyn, said Michael
Amirkhanian, Massey Knakal director of sales.
Demand appears to be centered around the Atlantic Yards
area, where the National Basketball Association’s Brooklyn Nets’
new arena will open later this year, Amirkhanian said.
“In the outer boroughs, clearly there’s more opportunity
in terms of where cap rates are,” said Garrett Thelander,
managing director of Massey Knakal Capital Services. “If you
add to that the fact that they’re not paying that much more for
the cost of debt in the outer boroughs, it makes it doubly more
accretive. I’m sure there are lots of investors out there who
appreciate that dynamic.”
To contact the reporter on this story:
David M. Levitt in New York at
[email protected]
To contact the editor responsible for this story:
Kara Wetzel at
[email protected]
