Investment Sales Fell Sharply in First Half of 2016

REBNY president John Banks III

NEW YORK CITY—Real estate investment sales activity in New York City’s five boroughs fell 20% to $29.5 billion in the first half of this year as compared to the mid-way point of 2015. However, before anyone goes running to the medicine cabinet for some antacids, the decline in investment activity here can easily be explained, according to a new report from REBNY> “The moderation of the New York City investment sales market follows an outstanding first half of 2015, which was driven by sky high transactions like the $1.95-billion sale of the Waldorf Astoria,” says REBNY president John H. Banks, III. “Demand remains robust for core assets throughout the city and top office building sales recorded in the first half of 2016 demonstrate the continued strength of the market.” The $29.5-billion sales total covers all commercial, manufacturing and multifamily rental property throughout the five boroughs in the first six months of this year. Office buildings dominated the highest-priced trades and the Bronx posted the largest increase in sales consideration among the five boroughs from the first half of 2015 to the first half of 2016, REBNY states in its Investment Sales Report released today. Total citywide transaction volume also fell 19% to 2,581 transactions year-over-year. The average citywide investment sales consideration per half year has totaled $29.6 billion, while transactions have averaged 2,604 per half year since REBNY first started tracking investment sales in 2014. Therefore, the sales volume total is just about at the average for the three-year reporting period and transaction volume is just 23 transactions off the average deal total for that period. The office building sector secured the largest share of citywide investment sales consideration—41% or $12.1 billion—in the first half of 2016 thanks to a handful of large transactions. The five largest sale prices were for office buildings: the $1.9-billion sale of 787 Seventh Ave., formerly the AXA Equitable Center; the $1.8-billion sale of 390 Greenwich St.; the $1.4-billion sale of 550 Madison Ave., the Sony Building; the $1.3-billion sale of 1285 Avenue of the Americas; and the $900-million sale of a 49% stake in 1211 Avenue of the Americas, the News Corp. headquarters. Manhattan investment sales outpaced the other boroughs in the first half of 2016 with $21.2 billion in consideration, which calculated out to 72% of citywide sales volume.  However, sales levels were 22% lower than the $27.2 billion registered in the first half of 2015. Manhattan transactions declined 28% year-over-year from 704 to 508. A bright spot for Manhattan was its industrial market, which enjoyed a robust 89% year-over-year increase from $92 million to $174 million, while the number of transactions were steady, decreasing from six to five.  Manhattan accounted for 91% of the $1.5 billion in citywide hotel sales consideration in the first half of 2016, which declined 64% from the $4.3 billion posted in the first half of 2015, REBNY reports. The Bronx recorded the greatest year-over-year percentage increase in sales consideration rising 4% from $1.50 billion to $1.55 billion, despite its 4% decrease in transactions from 457 to 441. Total Bronx multifamily rental building sales, both elevator and non-elevator properties, comprised more than a quarter of the city’s $7.9 billion in multifamily rental sales volume in the first half of 2016.