JANUARY 2016
As expected, 2015 was a record-breaking year for the investment sales market. The dollar volume traded was the highest in the city’s history and many transactions (like Stuy Town) were symbolic of the times. For our team, we sold almost $1 Billion worth of NYC multifamily, selling over 100 buildings in Manhattan, Brooklyn, Queens and the Bronx. We are thankful to our clients for allowing us to work for you.
We start 2016 in interesting times. Big questions will be answered this year. We will elect a new president and discover the extent of China’s economic woes. Does the stock market correction move us towards contraction? This uncertainty needs to be solved, but there are also many positive factors impacting the market.
ECONOMIC PROGRESS
The current period of economic expansion has been the slowest on record since World War II. That’s not great, but the upshot is it will last longer (we are entering its sixth year) than other expansions. Employment growth has been slow and steady and will continue with wages rising slowly over the next several years. These are strong fundamentals for real estate owners. Additionally, the Millennials entering the workforce today are the most educated generation in United States history.
LOCAL MARKET FACTORS
In 2015, real estate prices were flat to slightly higher. We are expecting similar results this year, with a few additional factors entering the mindset of investors.
First off, debt and equity have pulled back significantly for land sales and only the best locations will maintain pricing power. For income properties, the gap between buyers and sellers will widen. This is good news for capable brokers, as it will require more skill to complete transactions and get them closed. It should be noted that buyers are also expecting buildings to be clean during due diligence and, if not, a re-trade may be forthcoming.
For an opportunity in the marketplace, class A and C properties are priced very closely now, and it’s a good time to transition from inferior locations to superior ones. New capital continues to choose New York City multifamily as their top investment choice.
When you look at the investment alternatives available: the stock market, commodities, bonds, it’s very easy to see why cash flowing multifamily real estate is an appealing option — especially in New York. We are in a low yield environment and those who choose to wait until there is a dramatic change in pricing may be waiting for a very long time. Investors who make long-term bets on the housing stock of New York City will be hard to beat.
I wish you the best of luck this year.
