Investment Sales Quarterly Comparison Analysis

Real estate broker Shimon Shkury and his team have released their Northern Manhattan Sales Report, which includes a comparative analysis of first quarter commercial real estate transactions in Northern Manhattan for the last three years.

“In the midst of an unprecedented global economic and financial transition, the most striking measure of today’s investment property sales market is the low number of transactions,” said Mr. Shkury, a partner at Massey Knakal Realty Services. “Looking at Q1 2009, Northern Manhattan saw a total of 26 transactions representing $81,385,839 in aggregate consideration. Compared to Q1 2008, both trading and dollar volume declined by approximately 70 percent.”

The Northern Manhattan Sales Report provides analytical and transaction information for properties in four categories—multifamily properties, commercial leases, development sites, and townhouses. A map of the 26 properties sold in the first quarter in Northern Manhattan also is included.

“Bidding activity on properties we’re currently marketing suggests that this slow down is more attributed to a lack of supply than demand, especially for cash flowing multifamily assets,” he said. “However, many owners are reluctant to put their assets on the market unless they have a specific reason to sell (management issues, partnership disputes, or if they are under some level of financial pressure).”

Mr. Shkury said multifamily buildings have remained attractive to investors because these buildings produce a steady cash flow, and local and regional banks continue to offer financing in the 6 percent range. However, lenders are looking for buyers to put up 30 percent to 40 percent equity today, compared to 10 percent to 25 percent during the real estate boom.

“Those who need to sell multifamily businesses due to personal reasons such as retirement, divorce, a death in the family, or to raise extra cash, are selling their buildings for about 10 to 15 percent less than at the peak of the real estate boom,” Mr. Shkury said. ‘The good news is that even though prices have dropped slightly, the cap rates for these buildings have increased only slightly because of the declining oil prices and low interest rates.”

The report found, however, that the supply of multifamily buildings has fallen to about one-third of what it was in 2007 because building owners aren’t selling unless they have to.

In the first quarter of 2009, 11 multifamily buildings sold for a total of $55,365,500, compared to the first quarter of 2008 when 40 multifamily buildings sold for a total of $226,299,197 and the first quarter of 2007 when 47 multifamily buildings sold for a total of $491,535,121.

 Multifamily cap rates rose slightly during the 3 year period with the first quarter 2009 cap rate at 6.57 percent, compared to 5.64 percent in the first quarter of 2008 and 5.37 percent in the first quarter of 2007.

About the Northern Manhattan Team:

Shimon Shkury’s Northern Manhattan Team is made up of Michael A. Tortorici, sales team manager; Victor Sozio, director of sales; Christopher L. Lefferts, senior sales associate; Ivan Petrovic, director of research; and Brent Rance, research associate. Mr. Shkury’s Northern Manhattan Team produces a number of reports analyzing the real estate market including the Northern Manhattan Sales Report; Residential Rental Reports; and Harlem Condominium Report. For copies of the team’s research reports, please contact Mr. Petrovic at 212-660-7757.

 Since joining Massey Knakal in 2002, Mr. Shkury’s individual broker transactions have included: 195 transactions (257 in investment sales), consisting of 2 million in total square feet, and totaling about $650 million in investment property sales. The largest single asset transaction, a 250,000 square foot residential property on the Upper East Site, was sold for $80 million. The largest portfolio of three buildings–residential properties at 15 and 19 West 55th Street and 779 Riverside Drive, and an office building at 330 West 38th Street–totaled $120 million.

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