The 4 Mindsets of NYC Multifamily Investors
THE 4 MINDSETS OF NYC MULTIFAMILY INVESTORS
2016 was a transitional year in many ways for the New York City multifamily business. Financing, buyers’ mindsets, pricing, rents, and other aspects of the business changed. To gain a better understanding of our clients, we surveyed several thousand owners and investors about various market topics. I think you’ll be surprised at some of the answers I’ll share with you below.
Are you Buying Next Year?
Many investors pointed out that we are in the late stages of a market cycle, and are therefore more selective about what they purchase. That said, our first question was: “Do you plan on buying another New York City multifamily property in 2017?”
Do you want to invest in Free Market or Regulated Buildings?
Regulation, various confusing court decisions, and the impact of the New York Rent Regulation Act of 2015 caused problems in transactions this year. We wanted to see if regulation was impacting what investors were looking to buy. So we asked: “In your next purchase, would you prefer to buy a building that is mostly free-market or rent stabilized?” Response:
In Which Borough do you want to invest?
Every time I present on the market in front of a large group I am always asked, “What is the best market to purchase next year?” Interestingly, we asked investors to rank which borough they would make a purchase in. This is the first time that both Manhattan and Brooklyn were represented almost evenly. Response:
Where do you think values will be 3 Years from now?
Most telling about the strength of the market, we asked Investors their opinion of future values. Instead of asking about prices in 2017, we looked 3 years out as I believe this is more relevant. So we asked, “Three years from now, do you think prices will be the same, lower, or higher?” Response:
The answers above demonstrate why NYC Multifamily continues to be the most sought-after residential market in the world. I wish you the best of luck with your future investments.
Connect with us to stay in the loop on additional information & analysis!
Buy Peter's Book Today! Available on Amazon.
Catch up on our most recent posts here:
New York City multifamily owners are bombarded with an overwhelming amount of information they need to process. What information really matters?
As our team looks at the current environment, we believe 3 trends deserve focus in 2019.
The secret to long term investing is figuring out how to be active in every market. It’s all about having a “line in the water.” Today, most NYC multifamily investors have been pushed to seek higher yield, and sometimes more risk, in their investments.
This has kept pricing very competitive in the value-add segment of the NYC multifamily market, while pricing on repositioned and finished assets have softend since 2015. Some observers call this a “mispricing of risk.”
While transaction numbers have generally been in NYC, the New York Multifamily team at Marcus & Millichap closed more than $100 million in sales in the back half of summer 2018.
With 18 closed sales this summer across Manhattan and the boroughs and another 22 in contract, it was an active summer.