Despite high supply giving many multifamily landlords a headache in the past year — the asset class is thriving in New York City. The market reached $8.9 in dollar volume in 2024, representing a 14 percent rise from the previous year, a report from Ariel Property Advisors finds. Also, transactions in the sector climbed by four percent to 1,107.
The two biggest drivers were free-market buildings and rent-stabilized properties, which accounted for 63 percent and 29 percent of the dollar volume respectively in the market. Also, the two categories represented 48 percent and 47 percent of the total transactions.
“Although values for free market multifamily buildings across New York City have declined from their 2015 peak, pricing for these assets increased slightly in 2024 compared to 2023,” Shimon Shkury, president and founder of Ariel, said in a statement.
“Values for rent stabilized buildings, however, have dropped 35-60% below their 2017-2018 peak as owners continue to struggle under the weight of rising expenses combined with the 2019 Housing Stability and Tenant Protection Act (HSTPA), which capped rents.”
Most of the NYC activity was completed in Brooklyn in 2024, which generated $3.48 billion in sales, a surge of 59 percent year-over-year. Manhattan below 96th street saw the next highest at $3.44 billion — but only increased by 11 percent from the previous year. Northern Manhattan also went up by 11 percent — but to just $674.5 million, while Queens rose 13 percent to $851.4 million. Meanwhile, the Bronx was the only submarket Ariel listed that saw a decline, as its $457.9 million represented a tumble of 59 percent.
Some major trades in Brooklyn were 540 Fulton Street going for $235.4 million and 80 DeKalb, for $202.5 million.
During the past three years, rents in Manhattan have surged 20 percent and almost four percent in 2024.
Looking ahead, Ariel is looking at three pieces that could shape the market in the future. One is Local Law 97, and the rules that require non-rent-regulated multifamily owners operating 25,000 square feet or less to abide by the greenhouse gas emission mandates. Another is liquidity in the market, as Ariel expects balance sheet lenders to be more active in the short term. And the other is rising insurance rates, which have shot up in recent years.
"This trend warrants close attention, especially as the rising frequency of natural disasters nationwide could further drive up insurance premiums for multifamily assets in NYC," Ariel said.