Massey Knakal's Property Sales Report
3rd Quarter 2011:
After nearly four years since the economic crisis began, the New York City commercial real estate market is slowly starting to see signs of stability that is expected to continue through the end of the year. New York City dollar volume is expected to reach $25B by year end, a 78% increase over 2010 and a 317% increase over 2009. Property sales are expected to reach 2,000 properties across all boroughs, an increase of 22% from last year, an annualized turnover ratio of 1.26% of the total stock of properties. As expected, Manhattan has led the way with a 93% increase in dollar volume over 2010 on an annualized basis, with Queens not far off at 70%. Manhattan’s $16.7B in sales accounts for 87% of total dollar volume in NYC. All submarkets are expected to see 20-30% increases in property sales volume with the exception of Northern Manhattan which is expected to remain flat in comparison to 2010.
Property Sales Volume & Turnover
During the 3rd quarter of 2011 (3Q11), the Brooklyn property sales market had 147 transactions consisting of 173 properties. The number of properties sold in 3Q11 has decreased 8% over last quarter and increased 25% over 3Q10. From 1-3Q11, Brooklyn has seen 447 transactions consisting of 529 properties. Year-end projections, on an annualized basis are expected to reach 596 transactions representing 705 properties, a 22% increase over 2010. The annualized turnover rate through 3Q11 is 1.08%.
Dollar Volume
In 3Q11, there was $310M of investment sales in Brooklyn, down 23% from 2Q11. Through 3Q11 there has been $1B in sales a 27% increase over 1-3Q10. If we examine this data on an annualized basis, we can expect the Brooklyn submarket to reach $1.4B, an increase of 33% from 2010. Through 3Q11, the average price per property in Brooklyn was $1.9M, an increase of 9% from 2010.
While the volume figures above reflect activity across all property types, below we examine pricing trends based on product type.
Industrial Buildings
• 3Q11 dollar volume is $46M, an increase of 34% from 2Q11, with projected volume for 2011 expected to reach $197M, up 35% from 2010
• 13 properties sold in 3Q11, down 7% from 2Q11, with 55 properties sold in 1-3Q11 down 8% from 1-3Q10
• $/SF through 3Q11 was $273, up 54% from 2010
Elevator Apartment Buildings
• Dollar volume in 1-3Q11 was $197M, an increase of 163% from 2010’s year-end total
• There have been 26 sales in 1-3Q11, with 5 occurring in 3Q11, 2011’s annualized total is expected to outpace 2010’s by 104%
• Cap Rates averaged 6.03% through 3Q11, down 106 bps from 2010, with GRM up from 8.19x in 2010 to 10.55x
• $/SF through 3Q11 was $145, down 24% from 2010
Walk-Up Apartment Buildings
• 3Q11 dollar volume is $67M, down 35% from 2Q11. Projected volume for 2011 is expected to exceed $344M, up 71% from 2010
• 52 properties have sold in 3Q11, up 4% from 2Q11. 150 properties sold in 1-3Q11. This property class is expected to exceed 2010 totals by 34%
• Cap Rates averaged 7.05%, down 5 bps from 2010. GRM is down from 10.12x in 2010 to 8.79x
• $/SF through 3Q11 was $164, down 5% from 2010
Mixed Use Apartment Buildings
• 3Q11 dollar volume is $47M, down 21% from 2Q11, with projected volume for 2011 expected to exceed $198M, up 34% from 2010
• 47 properties sold in 3Q11, down 19% from 2Q11. 146 properties sold in 1-3Q11 up 17% from 1-3Q10
• Cap Rates averaged 6.82%, down 45 bps from 2010
• $/SF through 3Q11 was $262, down 1.8% from 2010
Retail / Retail Condo
• Dollar volume in 1-3Q11 was $76M, with $36M coming in 3Q11. The $101M projected year-end total is a 46% decrease from 2010
• 17 properties have sold in 3Q11, up 42% from 2Q11. 44 properties sold in 1-3Q11 up 19% from the same time period in 2010
• $/SF through 3Q11 was $337, up 1% from 2010
Office
• Dollar volume through 3Q11 was $23M down 55% from 1-3Q10, with just $750K sold in 3Q11. Dollar volume is expected to end the year down 43% compared to 2010
• 10 properties have sold in 1-3Q11, equaling 1-3Q10’s tally, with only one property sold in 3Q11
• $/SF through 3Q11 was $256, down 5% from 2010
Development
• Dollar volume through 3Q11 was $161M, with $57M coming in 3Q11. Year end totals are expected to reach $215M, an increase of 136% over 2010
• 85 properties have sold through 3Q11, on pace to exceed 2010’s volume by 74%
• $/BSF through 3Q11 was $115, up 14% from 2010
Other Properties
• 13 Specialty Use/Conversion properties sold for $38M in 1-3Q11.
$/SF is averaging $271 in 2011, up 26% from 2010
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