Multifamily Drive NYC Transaction Volume in 2020

The multifamily market overwhelmingly drove transaction volume in New York City last year. In 2020, the market had a total of 1,251 transactions, and multifamily accounted for 391 of those deals. This data is from a new B6 Real Estate Advisors Market Insights Report, which takes a close look at the market activity last year.

Overall, transaction volumes in the market declined significantly during the pandemic. By the end of 2020, there was a 30% decline in year-over-year transactions and a 50% decline from the five-year average. Unsurprisingly, the first quarter had the strongest transaction volume. From the first quarter to the second quarter, which marked the onset of the pandemic, transaction volumes fell 48%, the second largest quarter-over-quarter drop in 40 years. For the remainder of the year, transaction volumes totaled an average of 250 deals each quarter.

While multifamily activity certainly helped boost the numbers, transaction activity fell short with sales volumes down 19% from 2019 and 56% from 2018. Mixed-use properties came in second with 296 total transactions, followed by retail with 137 total deals. Office and hospitality had the lowest deal numbers at 58 and 8 for the year, respectively.

Industrial was the biggest disappointment for the market. Many expected industrial deals—specifically last-mile and distribution facilities—would surge at the end of the year, as it did in other markets. However, that didn’t come to fruition. Only 95 industrial deals closed in 2020 with sales volumes down 40% from 2019.

Dollar volume declined more significantly than deal volume, down 50% for the year. The decline in dollar volume is large attributable to the lack of large office portfolio deals to trade hands. Overall, only 27 $100 million-plus transactions closed during the year, the lowest year on record since 2009.

This is year is looking better. B6 expects a 30% increase in transaction volume and a significant rebound during the summer following the vaccine rollout and government relief. However, B6 also acknowledges the significant challenges that New York City will have to face through the recovery, including reduced revenues from eviction moratoriums and business lockdowns. These shutdowns have not only cost business owners but have also created a substantial fiscal problem for the city. The reduction of construction activity has been a major hit to the local economy, with REBNY showing the city has lost $1.4 billion in tax revenue due to significant declines in real estate market activity.