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NYC Investment Sales Dollar Volume Falls by Nearly Half

Howard Raber, director at Ariel Property Advisors Howard Raber, director at Ariel Property Advisors

NEW YORK CITY—While the number of deals held somewhat steady, the dearth of large institutional-quality sales transactions hit the investment market hard in the first half of this year.

In a report released by Ariel Property Advisors, investment sales dollar volume in the first half of this year fell 47% as compared to a year ago. The brokerage firm states there were 253 sales transactions involving 299 properties that totaled $9.33 billion in the first half of this year. The report notes that first half transaction and property volume fell 19% and 18% respectively in 2017, as compared to the first six months of 2016.

The decline in first half results for 2017 were not nearly as pronounced when compared to the second half of 2016 with transaction, property and dollar volume falling by 3%, 8% and 12% respectively.

“The market was conspicuously listless earlier in the year since many investors opted to stay sidelined amid an evolving political and economic climate,” says Howard Raber, director at Ariel Property Advisors. “That uncertainty, however, eased as the year progressed and we saw a marked uptick in activity in May and June.”

Multifamily properties were the hottest transactional asset type during the first half of 2017 snagging a 41% market share of New York City’s volume, with 104 transactions involving 122 properties for an aggregate dollar volume of $1.27 billion.

Despite a 61% decrease in dollars spent from the second half of 2016, the number of transactions remained relatively stable, indicating a willingness to buy quality properties in coveted locations, Ariel officials say. With limited available inventory, the average price-per-square-foot climbed 2.3% from 2016’s average, reaching $980, while the average price-per-unit rose nearly 9% to $735,447.

Office investment sales were a bright spot posting the largest growth in aggregate dollar volume in the first half of 2017, soaring 53% from the second half of 2016 to $5.57 billion in the first half of this year. From January through June, the product type accounted for 59% of New York City’s dollar volume.

Fueling the sharp dollar volume increase was the $2.21-billion sale of 245 Park Ave. to the Chinese conglomerate HNA Group, one of the priciest-ever purchases of a Manhattan skyscraper, and the $1.04-billion sale of a 95% interest in 60 Wall St. to the Singaporean sovereign wealth fund GIC.

“These sales were symbolic of the affect foreign capital continues to have on the Manhattan investment sales market,” says Andre Sigourney, a director who specializes in Midtown West properties for Ariel. “They also reflect a continued desire by institutions to acquire trophy properties in strong sub-markets.”

Sales of development sites remained relatively stable in the first half of 2017. Dollar volume for development sites fell 3% to $988 million, with 36 transactions and 57 properties sold, a 12% decrease and 10% increase respectively from the second half of 2016.

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