Overall, New York's Tri-State commercial real estate market, which includes the Big Apple and parts of New Jersey and Connecticut — looks strong. In the second quarter, investment volume surged by 11 percent year-over-year to reach $8.8 billion, a report from CBRE finds.
The strongest gains were seen in the retail sector, which skyrocketed by 50.9 percent to $1.59 billion. Industrial enjoyed a 21.3 percent increase at $1.73 billion in volume, with office following at 18.3 percent to $2.19 billion.
While multifamily posted the highest volume among the asset classes in the Tri-State area ($2.55 billion), the volume was actually down by 10.6 percent in the sector. The only other CRE segment to see a decline was hotel, plunging by 21.3 percent. However, multifamily did show resilience in certain places. For example, Fairfield County in Connecticut and Hudson Valley enjoyed impressive 322 percent and 186 percent increases, respectively.
By Tri-State regions, the Bronx in the trailing four quarters ending June, witnessed the biggest growth, with investment activity in the NYC borough surging by 178.9 percent. Midtown, Manhattan, posted the strongest volume, at $8.3 billion. CBRE said that both markets are "being fueled by sales of residential properties."
Another interesting trend was cross-border investment into the Tri-State in the second quarter, which soared 500 percent year-over-year. Japan led, pouring $1.1 billion into the market. However, the figure was down by eight percent when tracking the trailing four quarters ending June.
"Private owners were the largest foreign buyers of Tri-State real estate, followed by investment managers and insurance companies," CBRE revealed.
Relative to the trailing four quarters ending June, Greater New York posted $37 billion in investment volume, leading all US markets. Next on the list were Los Angeles' $30 billion and Dallas' $24 billion. However, in terms of investment growth, Greater New York ranked ninth among the 20 largest regions.
While uncertainties remain ahead on U.S. trade policy and where interest rates will wind up, CBRE expects overall CRE volume nationally to increase by 10 percent this year. Particularly, the CRE firm sees office showing the most resilience, forecasting investment in the asset class to surge by 19 percent. Simultaneously, CBRE now only expects GDP growth to be 1.5 percent, down from its previous two percent and 2.5 percent forecast from January.
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