Stat of The Day: Apartment Buildings Not Selling So Much

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.
 

FOR IMMEDIATE RELEASE

From: Massey Knakal Realty Services

275 Madison Avenue, 3rd Floor
New York, NY 10016

Contacts: Richard Mulieri

The Marino Organization

212-889-0808

richard@themarino.org

MASSEY KNAKAL REPORT SHOWS MANHATTAN INVESTMENT PROPERTY SALES PRICES MOSTLY HIGHER

-Number of Buildings Sold Decline-

NEW YORK, May 15, 2008 – Sale prices per square foot of Manhattan apartment buildings below 96th Street increased in all three building categories – walk-ups, elevator and mixed-use buildings – according to the Massey Knakal Realty Services New York City Income Property Report for the second half of 2007. In Northern Manhattan (above 96th Street), prices were up in two of the three building categories. The number of buildings sold borough-wide in the last half of 2007, however, fell 27.5 percent compared to the previous six-month period.

Price per square foot for Manhattan walk-up buildings south of 96th Street posted the highest year-to-year percentage increase in the borough, reaching $605. That’s up by 29 percent from the second half of 2006. Walk-ups also posted a 19.1-percent increase from the first half of 2007. The increase in walk-up prices is more a reflection of higher quality buildings sold during the period than an actual increase in prices.

Price per square foot of Manhattan elevator buildings hit $527 per square foot, also a record and up 1.9 percent from the first quarter of 2007 and 17.4 percent from the same period a year earlier. Mixed-use buildings, typically apartment buildings with retail or commercial on the lower floors, tied the record high they set in the second half of 2006 at $940 per square foot, which was up 3.5 percent from the first half of 2007.

The rising prices in Southern 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 first half of 2006. The number of elevator buildings sold in Manhattan was up by 35.5 percent from a year earlier and up by 13.5 percent from the first half of last year. The number of mixed-use buildings sold was up by 51.7 percent from the second half of 2006, but fell by 1.1 percent since the first half of 2007. Cap rates and gross income multipliers were generally consistent with their 2006 levels.

“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.”

The scenario in Manhattan south of 96th Street – increased prices and decreased number of sales – played itself out in the northern part of the borough, with the exception of six-month price comparisons for walk-ups and mixed-use buildings, which were down by 10.2 and 6.1 percent, respectively. Walk-ups were up to $291 per square foot, an increase of 2.8 percent from the second half of 2006, and mixed-use buildings were up to $417 per square foot, an increase of 26.4 percent in that period. Elevator buildings were up by 17.6 percent from the second half of 2006 and up 22.2 percent from the first half of 2007, reaching $187 per square foot in the last half of 2007.

The number of buildings sold in Northern Manhattan was down across the board, with total sales falling to 148 in the second half of 2007, down by 11.9 percent from the second half of 2006 and by 29.5 percent from the first half of 2007. The number of mixed-use buildings sold fell by nearly half to just eight from the first half of 2006. Compared to the first half of 2007, the number of walk-ups and elevator buildings fell by 27.8 percent and 30.8 percent, respectively.

Citywide (excluding Staten Island, which is not tracked by the report), prices per square foot of all classes of apartment buildings in the last half of 2007 were up slightly to $234 – that’s a four-percent increase from the same period a year earlier and a 1.3-percent uptick from the first half of the year. The number of buildings sold citywide in the last half of 2007 was down 16.9 percent as compared to the first half of the year and down 6.9 percent from the second half of 2006.

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.

Stat of The Day: Apartment Buildings Not Selling So Much