According to the Manhattan 2024 Mid-Year Commercial Real Estate Trends report by Ariel Property Advisors, investment sales in Manhattan experienced a significant increase in the first half of 2024. The total sales volume reached $5.8 billion through 167 transactions, marking a growth of 14% and 16%, respectively, compared to the previous six months.
The report also revealed that while multifamily properties accounted for the largest number of transactions with a total of 90 sales, retail properties had a higher dollar volume due to acquisitions made by luxury retailers.
Howard Raber, director at Ariel Property Advisors stated that there was an evident shift in investor sentiment during this period as they became more aggressive compared to their conservative approach in the second half of 2023. This led sellers facing mortgage maturities and distress situations to make tough decisions about their assets while buyers took advantage of lower prices.
In terms of multifamily properties specifically, average pricing dropped by approximately $111 per square foot from $722 per square foot down to $611 per square foot. Additionally, average cap rates increased from 5.24% up to6 .19%. It was noted that predominantly free market buildings sold for just$679 per square foot -the lowest level since2013.
Mike Tortorici,founding partner atAriel addedthat there were positive signs seenin boththe office marketand development sector during this time frame.Office spaces saw improvement due to several owner-user purchaseswhile around50%ofManhattan’s$1.1 billiondevelopment salestook placeforoffice-to-residential conversions.This trend is attributedto initiatives takenbyboththecityandstate governmentsaimedat making such conversionsmore feasible,in order totackle New York City’s housing shortage issue.
