The Real Deal Online - 2008-05-15
by Tom Acitelli
The number of apartment buildings sold in Manhattan above 96th Street in the second half of 2007 dropped 29.5 percent from the first half of the year, according to a new report. The report, prepared by appraisal firm Miller Cicero for investment-sales brokerage Massey Knakal, shows also that the number of walk-up and elevator apartment buildings in Upper Manhattan fell by 30.8 percent from the first half of 2007.
Apartment building sales also dropped in Manhattan below 96th Street. Sales of walk-ups were down almost 50 percent from the first half of 2007. Sales of elevator buildings, however, increased 13.5 percent.
Sales of apartment buildings borough-wide fell 27.5 percent from the first half of 2007 through the second.
Full release on the report, which shows increases in sales prices for apartment buildings, below.
Sale prices of apartment buildings across the city inched up slightly, but the number of buildings sold declined, according to the Massey Knakal Sales Report for the second half of 2007. The mixed signals in the report could suggest prices will stabilize or even dip in 2008.
Citywide (excluding Staten Island, which is not tracked), prices per square foot of all classes of apartment buildings - elevator, walk-ups and mixed use - in the last half of 2007 nudged their way up to $234, up four percent from the same period a year earlier and up by only 1.3 percent from the first half of the year. Mixed-use buildings are typically apartment buildings with retail or commercial on the lower floors. The slight price increase in the second half of 2007 was accompanied by a sizable 16.9-percent reduction in the number of apartment buildings sold as compared to the first half of the year and a 6.9-percent reduction from the second half of 2006.
"The lower volume level is not necessarily attributable to decreased demand," said Massey Knakal Chairman Robert Knakal. "Demand is there, but buyers and sellers are engaged in a psychological battle - some buyers are being cautious and taking a wait and see attitude while sellers are reluctant to lower prices. Time will tell who flinches first.
"The majority of the transactions used for the report closed after the onset of the credit crunch and are, thus, reflective of our new world," added Knakal. "While lenders, in general, have tightened requirements, portfolio lenders are aggressively pumping money into the market primarily on assets in our niche, which is helping to stabilize value."
Prices per square foot of all categories of Manhattan apartment buildings below 96th Street increased, with walk-up buildings posting the highest year-to-year increase, hitting $605. That's up by 29 percent from the second half of 2006 and by 19.1 percent from the first half of 2007. Price per square foot of Manhattan elevator buildings south of 96th Street reached $527 per square foot, up 1.9 percent from the first half of 2007 and 17.4 percent from the same period a year earlier. At $940 per square foot, mixed-use building prices were unchanged from the second half of 2006 and up 3.5 percent from the first half of 2007.
The rising prices below 96th Street in Manhattan were accompanied by a significant drop in the number of walk-ups sold - down by nearly 50 percent from 178 in the first half of 2007 to 95 in the second half of the year. Sales were down a more modest 17.3 percent from the second half of 2006. The number of elevator buildings sold below 96th Street in Manhattan was up by 35.5 percent from the year ago period and up by 13.5 percent from the first half of last year. Mixed-use buildings sold were up by 51.7 percent from the second half of 2006, but fell by 1.1 percent since the first half of 2007.
The scenario in Manhattan south of 96th Street - stable or slightly higher prices and decreased number of sales - played itself out in nearly every category of building type in the northern part of the borough, as well as in The Bronx, Brooklyn and Queens.
Other highlights for the second half of 2007:
* The number of sales for all three building types in Northern Manhattan was down to 148, a 29.5-percent decrease since the first half of 2007 and down 11.9 percent from the second half of 2006.
* The number of sales for all three building types in The Bronx was 255 in the second half of 2007, down 4.1 percent from the second half of 2006 and down 24.1 percent from the first half of 2007.
* Prices per square foot for Bronx walk-ups were up by 16 percent from the first half of the year and down by about the same percentage from the second half of 2006. * In Brooklyn, the total number of buildings sold across all property types fell to 746.
* Prices per square foot for Brooklyn elevator and mixed-use buildings were up, while prices for walk-ups declined.
* Total number of buildings sold in Queens across all property types fell to 352, down 3.9 percent from the second half of 2006 and down 4.2 percent from the first half of 2007.
* Prices per square foot for Queens apartment buildings were mostly higher.
About the Report
The Massey Knakal New York City Income Market Report, prepared by appraisal firm Miller Cicero, LLC, is the only report of its kind and is a vital tool in gaining understanding of nuances in the complex investment market. The report examines various market indicators by property type in five markets: Manhattan, Northern Manhattan, Bronx, Queens and Brooklyn.
Methodology
Median price per square foot and the number of sales were based on all closed sales in the public record over $500,000, as reported by Property Shark (www.propertyshark.com). Cap rates and Gross Income Multipliers were based on sales researched by Miller Cicero, LLC in addition to properties sold by Massey Knakal Realty Services, and represent a reasonable sampling of all sales.
About Massey Knakal
Massey Knakal Realty Services is a full-service property sales company specializing in the sale of investment and user properties. The firm was founded in 1988 by Paul J. Massey, Jr. and Robert A. Knakal, two former Coldwell Banker Commercial (now CBRE) executives. The duo ran the property sales division of Coldwell for four years before leaving to form their own company.