In 2023, the multifamily sector in New York City experienced a notable downturn, with total dollar volume of $7.4 billion spread across 1,036 transactions, a year-over-year drop of 52% and 35%, respectively, according to Ariel Property Advisors’ Multifamily Year in Review New York City.
New York City Multifamily Volume 2023 vs. 2022
“Several factors contributed to the year-over-year decline, including the impact of interest rates staying higher for longer, the ongoing effects of the 2019 Housing Stability and Tenant Protection Act regulations, and closure of Signature Bank, which was a major multifamily lender,” said Shimon Shkury, President and Founder of Ariel Property Advisors. “However, we’re optimistic because we believe that job gains, interest rate cuts and an abundance of capital will lead to growth in multifamily investment during 2024, most likely in the second half of the year.”
In 2023, the higher cost of capital resulted in a decline in values, particularly for rent-stabilized assets, which saw prices drop from their peak in 2018 in all submarkets except for Manhattan below 96th Street, which saw peak pricing in 2016.
Rent Stabilized Values in 2023 Drop Citywide From Peak Pricing*
The affordable housing subsegment did well in 2023 accounting for 35% of the multifamily dollar volume, in part due to the nearly $1 billion partial interest platform sale of the Omni Affordable Portfolio to Nuveen. Major contributors to the strength in affordable housing transactions are the city’s interest in preserving existing affordable housing and the further availability of mission-driven equity interested in investing in this sector.
Predominantly free market properties accounted for 48% of the dollar volume, but the year only saw nine transactions that exceeded $100 million, the lowest number in the past decade, excluding the anomaly of 2020. Of the nine $100 million plus deals, three were for free market buildings and six for affordable housing.
Submarket Highlights:
Manhattan below 96th Street. Manhattan’s multifamily dollar volume plummeted 64% to $2.71 billion in 2023 from 2022, the lowest dollar volume since 2010 except for 2020, which recorded $2.5 billion in sales. Transaction volume in 2023 also fell 31% to 163 deals over the same period. Larger buildings with 10+ units accounted for 84% of the total dollar volume. Two of the largest deals included 265 East 66th Street, a 328-unit free market multifamily that sold for $402,625,000 in April, and 377 East 33rd Street, a 212-unit free market building that sold for $210 million in August.
Brooklyn. Multifamily sales volume in Brooklyn totaled $2.2 billion in 2023, a 56% decline from 2022 and transactions dipped 36% to 507 deals. Predominantly free market buildings accounted for 46% of the dollar volume, affordable housing 34% and rent stabilized 20%. Significant transactions included the $150 million sale in May of the Sea Park affordable housing portfolio comprised of three multifamily properties with 818 units and one development site, and 416 Metropolitan Avenue, a 125-unit free market building that traded in July for $97.5 million.
The Bronx. In 2023 compared to 2022, dollar volume in the Bronx fell a slight 6% to $1.1 billion and transactions dropped by 41% to 82. Affordable housing accounted for 83% of the borough’s dollar volume due to the second quarter sale of the Omni portfolio, of which two-thirds of the units valued at nearly $593 million were located in the Bronx.
Queens. Queens multifamily dollar volume fell to $735.83 million in 2023, a 39% drop from 2022, and transactions fell a comparable 37% to 223. Of the deals, rent stabilized buildings accounted for 73% of the transactions and 59% of the dollar volume. Significant transactions included the $48 million sale in November of a rent stabilized building with 312 units at 99-19 66th Road, and the $39 million sale in June of a rent stabilized property with 296 units at 54-39 100th Street.
Northern Manhattan. Of all the submarkets in 2023, only Northern Manhattan saw an increase in dollar volume year-over-year. Dollar volume rose 34% to $642.47 million, of which $618.4 million was for sales of larger buildings with 10 or more units. However, transactions dropped 12% to 61 deals. Predominantly rent stabilized building sales accounted for 50% of the total dollar volume, followed by 26% affordable and 24% free market buildings. Significant trades included the sale of 2802-2816 Frederick Douglass Boulevard, a rent stabilized property with 546 units that sold for $86,750,000 in June, and the BRM Northern Manhattan Rent Stabilized Portfolio with 437 units that sold for $46,646,325 in September.
The full Multifamily Year in Review New York City report is available here.
About Ariel Property Advisors
Ariel Property Advisors is a New York City-based commercial real estate services and advisory company.
* Peak Pricing for RS in Manhattan below 96th Street 2016; other submarkets 2018.
