Brooklyn’s multifamily dollar volume jumps 50 percent to $505M in the third quarter

December 3, 2014 By Jonathan Berman, President, Ariel Property Advisors Brooklyn Daily Eagle

Jonathan Berman, photos courtesy of Ariel Property Advisors

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Multifamily dollar volume in Brooklyn jumped 50 percent to over $505 million in the third quarter 2014 compared to the third quarter 2013, and the number of buildings traded in the borough rose 16 percent to 85, according to Ariel Property Advisors’ Multifamily Quarter in Review: New York City I Q3 2014.

Brooklyn accounted for 26 percent of the 330 multifamily buildings sold in New York City in the third quarter and 16 percent of the city’s total multifamily dollar volume of $3.258 billion.

New York City as a whole saw a resurgence of institutional deals in September, propelling 3Q 2014 multifamily figures to the strongest quarterly transaction volume and nearly the highest dollar volume seen since the blockbuster 4Q 2012. This is unique in that the summer months were primarily dominated by smaller deals and, consequently, deal flow in the third quarter exceeded our expectations.

In Brooklyn, the quarterly multifamily report shows that the average price per unit for multifamily buildings rose to $257,919 in the second and third quarters of 2014 combined up from $217,330 during the same two quarters last year, and that the average price per square foot during this period increased to $297 in 2014 from $259 in 2013. The average cap rate for the borough was 5.52 percent.

In many Brooklyn neighborhoods, however, prices are far above the borough average. From April 2014 to September 2014, multifamily prices in Williamsburg were among the highest in Brooklyn—averaging $444 per square foot and $489,323 per unit. Williamsburg also led Brooklyn in dollar volume with a total of $163.68 million sold in nine transactions consisting of 11 buildings.

Significant Brooklyn deals in the third quarter included a 52-unit package of walk-up buildings located at 107-113 Greenpoint Avenue in Greenpoint that sold for $23.75 million, or $616 per square foot, highlighting the borough’s surge in pricing. In Clinton Hill, a 65,000 square foot building sold for $28.6 million, or $440 per square foot. The new ownership plans to renovate the units in an effort to focus on catering to the nearby student populations of Pratt Institute and Long Island University.

Flatbush recorded the highest number of transactions and buildings sold in the second and third quarters with 17 buildings trading over 10 transactions totaling $106 million, the multifamily report shows. Bedford-Stuyvesant and Crown Heights followed with eight transactions each. A total of 13 buildings valued at $48 million traded in Bedford-Stuyvesant, and 12 buildings valued at $60.88 million traded in Crown Heights.

With a number of significant deals in the pipeline scheduled for a year-end close, strong supply/demand dynamics, and solid fundamentals, we expect the fourth quarter to build on this momentum.

The multifamily transactions included in the analysis occurred at a minimum sales price of $1 million, with a minimum gross area of 5,000 square feet, and with a minimum of 10 units. For a copy of the report, please see http://arielpa.com/newsroom/report-MFQIR-Q3-2014.

Ariel Property Advisors is a New York City investment property sales firm with an expertise in the multifamily and development market. The firm also produces a number of research reports including the New York City Multifamily Month in Review, Multifamily Quarter in Review, Multifamily Year in Review, and Mid-Year and Year-End sales reports for the Bronx, Brooklyn, Northern Manhattan, Manhattan, and Queens. For more information see arielpa.com.