by Ariel Property Advisors Released January 2019

Transcription

1 Manhattan 2018 Year-End SALES REPORT by Ariel Property Advisors Released January 2019 Investment Sales Capital Services Investment Research arielpa.nyc

2 x x Year-End OVERVIEW $24.4B 501 2% increase 626 8% increase compared to 2017 compared to % increase Dollar Volume compared to 2017 Transaction Volume Property Volume Dear Friends, was a year in which the real estate investment sales market adjusted due to various economic and political factors. Some factors were already in place, such as rising interest rates; others were, and still are, considered pending and uncertain such as possible local law changes to rent regulation. Still, the activity in 2018 should be considered a continuation of what was seen in While more bigticket properties were sold in 2018 than the previous year, sales volume and pricing remained rather stable. For 2018, Manhattan saw a total of 501 transactions consisting of 626 properties totaling approximately $24.37 billion in gross consideration. Compared to 2017, while transaction volume remained flat, there was an 8% increase in property volume and a 33% increase in dollars spent. These increases may be attributed to a resurgence in large institutionalcaliber deals, such as Google s purchase of 75 9th Avenue (aka Chelsea Market ) for $2.39 billion. For the rest of the market, however, investors continued with a more prudent approach evidenced by a slight 5% decrease in price per square foot ($891/sf), while cap rates held relatively stable at 3.72%. For total transaction volume across Manhattan, Downtown West led all neighborhoods with 114 sales, while the Upper East Side and Midtown East tied for second with 97 transactions each. Investors spent the most in Midtown West, with $7.54 billion in sales, followed by Midtown East s $7.01 billion. As to be expected, activity in these areas was bolstered by the larger office and commercial deals, which encompassed 46% of Manhattan s dollar volume, with $11.15 billion in sales. Examples include the acquisition of the 500,000 square-foot office and retail conversion project at th Avenue by L&L Holding Company Normandy Real Estate Partners for $880 million, and Vanbarton Group s purchase of the 700,000 square foot tower at 425 Lexington for $701 million. As is usually the case, the multifamily asset class was seen to be the most transactional with 194 transactions involving 248 properties for an aggregate dollar volume of $4.98 billion, which accounts for a 59% increase over the $3.12 billion spent in Notable multifamily transactions in 2018 include the sale of 101 West End Avenue to a joint venture of the Dermot Company and PGGM for $ million; and Dalan Management Associates acquisition of th Avenue, a 115,000 square foot contiguous mixed-use portfolio for $83 million. Despite market conditions that would suggest that development would slow down, 2018 was actually relatively stable with 75 transactions encompassing 127 properties. Interestingly, there was a 36% increase in dollars spent at $3.84 billion. This increase, however, may be skewed by developers who were looking to acquire more significant projects. For example, Silverstein Properties acquired a portfolio from The Walt Disney Company that was used as ABC s headquarters located on West 66th Street between Columbus Avenue and Central Park West for $1.15 billion ($495/bsf). Also, Howard Hughes Corporation acquired the approximate 290,000 buildable square foot site at 250 Water Street for $ million ($634/bsf). Looking ahead in 2019, we will be keeping an eye on the Federal Reserve, which increased rates four times in Subsequent increases to the major indices will affect financing options for investors in all asset classes. Separately, reforms to rent regulation are expected to be implemented due to the recent shift in New York State s political landscape, which in turn could potentially be one of the biggest drivers of multifamily real estate prices in Lastly, activity within newly designated Opportunity Zones will also be closely followed to determine potential market impact. We look forward to our continued efforts in providing the Manhattan real estate community with the most informative and insightful market knowledge available. For further information regarding any of the enclosed properties or to discuss real estate trends in general, please feel free to contact us any time. DOLLAR VOLUME COMPARISON BY SUB-MARKET % Midtown West $7,549,116,204 29% Midtown East $7,019,569,579 9% Downtown West $2,220,409,751 DOLLAR 8% Downtown East $2,009,783,477 VOLUME 8% Upper East Side $2,101,756,215 15% Upper West Side $3,466,449,555 GRAND TOTAL $24,367,084,781 TRANSACTION VOLUME COMPARISON BY SUB-MARKET % Midtown West 62 19% Midtown East 97 23% Downtown West 114 TRANSACTION 14% Downtown East 66 VOLUME 20% Upper East Side 97 12% Upper West Side 65 GRAND TOTAL 501 Manhattan 2018 Year-End Sales Report

3 REAL ESTATE TIMELINE / PRICING METRICS $891 $693, % $691 $2,313 $ / SF - Multifamily $ / Unit - Multifamily Cap Rate - Multifamily GRM - MF $ / BSF - Development* $ / SF - Commercial 2018 Property Value Metrics Manhattan REAL ESTATE TIMELINE Transaction Volume Dollar Volume $25b 500 $20b 400 $15b 300 $10b $5b 100 $0mm 0 1H H H H H H 2018 Trans Vol: Dollar Vol: $17.5B $10.6B $8.56B $9.78B $13B $11.4B PROPERTY VALUE METRIC COMPARISON ( ) INDICATOR $/SF - Multifamily $662 $863 $936 $958 $945 $891 $/Unit - Multifamily $460,964 $697,759 $725,520 $675,522 $669,315 $693,251 Cap Rate - Multifamily 4.37% 3.69% 3.72% 3.57% 3.61% 3.72% GRM - Multifamily $/BSF - Development* $405 $602 $610 $640 $682 $691 $/SF - Commercial $1,544 $3,128 $2,192 $1,987 $2,146 $2,313 *reflects transactions of vacant land or equivalent development sites Ariel Property Advisors arielpa.nyc

4 OBSERVATIONS BY PRODUCT TYPE Multifamily Multifamily investment sales in Manhattan improved with $4.98 Billion in total dollar volume, representing a 59% increase from Meanwhile, transaction volume and property volume remained relatively stable with a marginal 3% decrease and 6% increase, respectively. Institutional investors were active with seven multifamily transactions of more than $100 million compared to just two transactions in Of note, Invesco notched the largest multifamily deal of the year with its $607 Million acquisition of an 80% interest in Avalon Bay s five building East Village portfolio. In addition, Equity Residential sold a 503 unit Upper West Side apartment building located at 101 West End Avenue to a joint venture of the Dermot Company and a Dutch pension fund for $ million. Office The office sales market fared well as total dollar volume saw a 34% increase in 2018 from a near $8.29 billion to $11.15 billion. Activity was bolstered by several substantial institutional transactions. Most notably, Google s near $2.40 billion acquisition of the Chelsea Market building at 75 Ninth Avenue was the second largest sale in NYC history. Other examples include Savana s purchase of 5 Bryant Park for $640 million and SL Green s sale of the office condo at 1745 Broadway to Invesco for $633 Million. This type of activity bodes well for the future of the office sales market in Manhattan. Due to historically low unemployment and rising wages, this asset class looks very healthy heading into Development Sites Total consideration paid for Manhattan development sites in 2018 grew by 36% compared to 2017, achieving $3.84 billion in total dollar volume. This figure was boosted significantly by Silverstein Properties blockbuster purchase of ABC s Upper West Side campus for $1.15 Billion. Still, transaction volume year over year remained stable from 2017, while property volume increased by 14%. Although the average price per buildable square foot did increase by 1.3% to $691/BSF in 2018, the number may be inflated due to certain transactions where some developers were willing to pay high prices to configure certain assemblages. For example, HFZ Capital s acquisition of 9 West 29th Street for $54.30 Million or $1,964 per BSF, the highest price per BSF paid in 2018, which created a more efficient floor plate for the construction of an over 50-story office tower. 4 DOLLAR VOLUME PROPERTY TYPE 2018 % CHANGE % CHANGE Commercial $2,908,305,540 4% $2,789,173,324-33% $4,317,870,495 Ind / Gar / Dev* $3,839,489,021 36% $2,817,648,629 9% $3,522,532,861 Multifamily $4,976,304,870 59% $3,124,151,079-23% $6,469,852,641 Office $11,146,042,929 34% $8,287,929,192-11% $12,476,359,719 Special Purpose $74,191,304 17% $63,318,000 3% $72,250,000 User $1,422,751,117 13% $1,254,489,859 20% $1,188,918,471 Grand Total $24,367,084,781 33% $18,336,710,083-13% $28,047,784,187 TRANSACTION VOLUME Commercial 57-14% 66-27% 78 Ind / Gar / Dev* 75 1% 74-22% 96 Multifamily 194-3% % 232 Office 44 29% 34 10% 40 Special Purpose 4 100% 2 33% 3 User % 114 1% 126 Grand Total 501 2% % 575 PROPERTY VOLUME Commercial 64-19% 79-30% 91 Ind / Gar / Dev* % 111 9% 117 Multifamily 248 6% % 310 Office 55 41% 39 31% 42 Special Purpose 4 100% 2 33% 3 User % 115 1% 127 Grand Total 626 8% 580-9% 690 *Ind / Gar / Dev: Industrial / Garage / Development Manhattan 2018 Year-End Sales Report

5 FEATURED TRANSACTIONS Chelsea 75 9 th Avenue Upper West Side American Broadcasting UWS Theater Portfolio Chelsea th Avenue Midtown East 425 Lexington Avenue Upper West Side 101 West End Avenue Property Type: Office Sale Amount: $2,397,501,899 $/SF: $1,998 Sale Date: 3/20/2018 Property Type: Development Sale Amount: $1,155,000,000 $/BSF: $495 Sale Date: 6/15/2018 Property Type: Office Sale Amount: $880,000,000 $/SF: $780 Sale Date: 10/23/2018 Property Type: Office Sale Amount: $701,000,000 $/SF: $935 Sale Date: 10/30/2018 Property Type: Multifamily Sale Amount: $416,100,000 $/SF: $660 Sale Date: 9/13/2018 Manhattan HEAT MAP BY NUMBER OF PROPERTIES TRADED TOP 5 NEIGHBORHOODS BY PROPERTY VOLUME NEIGHBORHOOD # OF PROPERTIES 1. Upper East Side Upper West Side Midtown West Village East Village Ariel Property Advisors arielpa.nyc

6 DEVELOPMENT PROJECTS IN PROGRESS BOROUGH-WIDE PROJECT UPDATES 50 Hudson Yards Developer: Related Companies, Oxford Properties Group Status: Under Construction Completion: 2022 Type: Retail, Office Gross SF: 2,264,732 The Spiral 66 Hudson Boulevard Developer: Tishman Speyer Status: Under Construction Completion: 2022 Type: Retail, Office Gross SF: 2,200, Wall Street Developer: Macklowe Properties Status: Under Construction Completion: Fall 2020 Type: Retail, Condominiums Gross SF: 936,685 St John s Center - North-West Building West & W Houston Street Developer: Atlas Capital, Westbrook Partners Status: Planned Type: Retail, Apartments Gross SF: 550, Park Avenue Developer: L&L Holding Company, GreenOak Real Estate Advisors, Tokyu Land Corporation Status: Under Construction Completion: Early 2020 Type: Office Gross SF: 512,671 JPMorgan Chase Headquarters 270 Park Avenue Developer: Tishman Speyer, JPMorgan Chase Status: Planned Completion: 2024 Type: Retail, Office Gross SF: 2,400,000 Manhattan 2018 DEVELOPMENT* ACTIVITY BY SUB-MARKET LOCATION TOTAL DOLLAR VALUE TRADED TOTAL TRANSACTIONS TOTAL PROPERTIES TRADED TOTAL BSF Downtown East $387,549, ,428 Downtown West $281,845, ,025 Midtown East $589,492, ,373 Midtown West $631,083, ,208,799 Upper East Side $506,547, ,208 Upper West Side $1,424,000, ,837,159 GRAND TOTAL $3,820,517, ,533,993 *Includes vacant land & conversion properties only Manhattan 2018 Year-End Sales Report

7 RE-ZONING TIMELINE / OPPORTUNITY ZONES MAP FEATURED REZONING INITIATIVES - PAST 3 YEARS: 1. Block 675 Planning Framework In Progress 2. Special Garment Center District Adopted 12/20/ Greater East Midtown rezoning Adopted 8/19/2017 LEGEND: YTD In Progress Parks Opportunity Zones Ariel Property Advisors arielpa.nyc

8 March - April 18 May - July 18 NEWS TIMELINE 8 March 5th Blackstone Group is selling another one of its trophy office towers along Bryant Park, The Real Deal reported. Savanna signed a contract late last week to acquire 5 Bryant Park, also known as 1065 Sixth Avenue. for $640 million. Blackstone has been looking to sell the 34-story, 665,000-square-foot property since 2016, when the private-equity giant first put it on the market. March 15th Manhattan s multifamily market had a very strong January, thanks largely to Vanbarton Group s $316 million purchase of the 339-unit Vogue building, The Real Deal reported, citing a new report from Ariel Property Advisors. The borough had the highest dollar volume throughout all the city s submarkets in January, and dollar volume jumped by 39 percent month-over-month. Transaction volume did not change at 13 sales, while building volume dropped 18 percent to 14 properties. The number of listings went up and the sales market slowed down in Manhattan during the first quarter of the year, The Real Deal reported. Sales of apartments in the borough hit their slowest pace in five years due in part to slower closings at new luxury buildings and condo buyers refusing to pay high asking prices, according to the Wall Street Journal. At the same time, developers dealing with constraints from lenders and equity partners are not eager to drop prices on their new units. April 17th Sales of Manhattan development sites have begun to perk up as buyers and sellers come closer to alignment, Ariel Property Advisors reported. Developers are particularly fond of sites situated in the trendy, tech-heavy neighborhood of Chelsea, with the recently-approved pricing of air rights on its west side bound to bolster their demand even further. April 24th Landesbank Baden-Württemberg is leading a $225 million refinancing of Related Companies rental building at One Hudson Yards, the Commercial Observer reported. The loan consolidates $200 million in previous debt from J.P. Morgan Chase and ups Related s tab by an additional $25 million. It wasn t immediately clear whether other lenders contributed debt to the transaction through a syndication. May 3rd A Midtown Manhattan skyscraper topped the list of biggest projects filed with the city in April, The Real Deal reported. Solow Realty and Development s plans at 12 West 57th Street grabbed the No. 1 spot last month. The tower will stand 52 stories tall and span 383,134 square feet, split between residential and commercial space. Other large projects coming to the city include a storage facility on Staten Island, a mixed-use project on Metcalf Avenue in the Bronx, and a trio of buildings in Forest Hills from Phipps Houses. June 12th The Department of City Planning kicked off the months-long process to change zoning rules in the Garment District, The Real Deal reported. The agency certified a text amendment that will lift a 1987 zoning restriction in certain parts of the neighborhood. This marks the first step in the Unified Land Use Review Procedure (ULURP), which will take several months and culminate in a vote by the City Council. July 16 Silverstein Properties is in contract to acquire the American Broadcasting Company s Upper West Side headquarters complex for more than $1 billion, the Commercial Observer reported. The developer has struck a deal with ABC s parent company, the Walt Disney Company, to acquire the broadcaster s New York City headquarters, comprising several buildings along West 66th Street between Central Park West and Columbus Avenue, sources told CO. While the exact purchase price could not be confirmed, sources said Silverstein will pay north of $1 billion for the properties. At the same time that it s selling its longtime Upper West Side headquarters, the Walt Disney Company picked up a massive Manhattan 2018 Year-End Sales Report

9 July - November 18 December 18 development site at 4 Hudson Square for $650 million, The Real Deal reported. Disney acquired the rights to develop the Trinity Church Real Estate-owned site, which offers 1.2 million buildable square feet, for 99 years, the corporation announced. July 30 Midtown East s allure to real estate developers is no mystery, with the neighborhood s centralized location and numerous transportation options a significant draw for businesses and residents alike, Ariel Property Advisors reported. Demand for land in the region is poised to remain strong in the years ahead as commercial developers seek opportunities to take advantage of the recent rezoning of Midtown East, while residential developers aim to capture the live-work demographic. August 27 It turns out that New York City s best-selling new development isn t in Manhattan, The Real Deal reported. The Grand at Sky View Parc in Flushing took that superlative, according to this week s market reports. Onex Real Estate Partners the Grand at Sky View Parc in Downtown Flushing ranked as the best-selling residential building for the first half of the year. The study only accounted for new developments. October 8 Plans announced this week for a 1.3 million-square-foot office building on Manhattan s West Side mark a dramatic departure from what was expected when the St. John s Terminal building was rezoned in a contentious process two years ago, Crain s New York reported. Instead of nearly 1,600 apartments, there likely will be several hundred. And instead of a small portion set aside for commercial space, the majority of the project will now be devoted to office tenants. November 5 Vornado Realty Trust plans will soon kick off the first phase of its megacampus redevelopment at Pennsylvania Station, The Real Deal reported. The real estate investment trust expects to start work before the end of the year on the $200 million renovation of One Penn Plaza, Vornado CEO Steve Roth said on the company s third-quarter earnings call Tuesday morning. December 17 Manhattan rents fell by 1.9% last month compared to the year before when accounting for concessions by landlords, Crain s New York reported, citing a new report. The dip in effective rent was the fourth in the past six months and dropped the median price to $3,221, according to appraisal firm Miller Samuel. The decline is being driven by a number of factors. Rents are correcting themselves after prices rose beyond what the market would bear, prices are being depressed by a glut of supply, and New Yorkers are simply reaching the limits of what they can afford. December 24 Google is creating a new $1 billion campus across three buildings in Hudson Square, the company announced in a blog post, the Commercial Observer reported. The tech giant will house its sales division, called the global business organization, in the 1.7-millionsquare-foot complex, which will span three prewar buildings near the West Side Highway and the Holland Tunnel. The company has leased large blocks of space at 315 Hudson Street and 345 Hudson Street and signed a letter of intent at the soon-to-be-redeveloped St. John s Terminal at 550 Washington Street. It hopes to move into the Hudson Street buildings by 2020 and into St. John s Terminal in Over the past three years, residential buildings have taken up an increasingly large share of new projects in New York City, the Real Deal reported. While they made up less than half of 2016 s top 10 list, residential projects accounted for all of the top 10 real estate projects filed in Ariel Property Advisors arielpa.nyc

10 FEATURED MARKET ACTIVITY BY ARIEL PROPERTY ADVISORS 141 EAST 33 RD STREET New York, NY Location: Kips Bay Property Type: Multifamily FOR SALE: PLEASE INQUIRE YORK AVENUE ASSEMBLAGE New York, NY Location: Upper East Side Property Type: Development SOLD: $46,500, EAST 46 TH STREET #GARAGE New York, NY Location: Turtle Bay Property Type: Garage FOR SALE: PLEASE INQUIRE 225 EAST 39 TH STREET AIR RIGHTS - CB6 New York, NY Location: Financial District Property Type: Development SOLD: $10,492, MONROE STREET New York, NY Location: Lower East Side Property Type: Multifamily FOR SALE: $9,250, WEST 56 TH STREET New York, NY Location: Hell s Kitchen Property Type: SRO FOR SALE: PLEASE INQUIRE 280 WEST 25 TH STREET New York, NY Location: Chelsea Property Type: Townhouse FOR SALE: $8,250, WEST 36 TH STREET New York, NY Location: Hell s Kitchen Property Type: Development FOR SALE: $7,300, EAST 53 RD STREET New York, NY Location: Sutton Place Property Type: Townhouse FOR SALE: $4,950, WEST 23 RD STREET #REST New York, NY Location: Chelsea Property Type: Commercial Condo FOR SALE: $4,100,000 Manhattan 2018 Year-End Sales Report

11 INVESTMENT SALES, CAPITAL SERVICES & INVESTMENT RESEARCH ABOUT US EXCLUSIVE MARKET REPORTS Ariel Property Advisors is an investment real estate services and advisory company located in New York City. Our company is unique to the industry in that it is structured like an investment bank, with separate divisions for investment sales, capital services and research. This strategic approach to commercial brokerage services allows our professionals to deploy greater resources and provide consistent, seamless execution to every transaction. We cover all major commercial asset types throughout the New York metropolitan area, but maintain a very sharp focus on multifamily, mixed-use, development, commercial and industrial properties. From consultation through closing, our professionals are dedicated to achieving optimal results for our clients. Combining the insights of veteran brokers with the latest real estate market intelligence, we find solutions that meet the specific needs of both the client and the asset. COMPLIMENTARY ASSET EVALUATIONS Cultivating long-lasting relationships with the real estate community is essential to the success of both our firm and our clients, so we encourage all market participants to use our company as a resource. Contact us today for Asset Evaluations, listing information, financing opportunities or our latest market reports. QUALITY BROKERAGE SERVICES Ariel Property Advisors arielpa.nyc

12 arielpa.nyc COMPILED BY: INVESTMENT SALES & CAPITAL SERVICES Shimon Shkury x11 Victor Sozio x12 Michael A. Tortorici x13 Howard Raber, Esq. x23 Andre Sigourney x55 August Friscia x18 Matthew L. Gillis x42 James Meehan x80 Paul McCormick x45 INVESTMENT RESEARCH Dusan Panic Nenad Klickovic OUR METHODOLOGY Data collection: Property transfers are collected through ACRIS and Property Shark each week, vetted by the research team, and cross-checked with news articles. Information obtained from third-party sites such as Costar and LoopNet, along with news articles from sites such as The Real Deal. Information from appraisers and brokers on sales not yet publicized. Criteria: Minimum sales price of $850k Does not include city transactions, internal sales, notes & ground leases Projections: Sales are averaged on a per-day basis throughout the year and projected as such The assumed ACRIS transfer lag time is 30 days -if final data collection is January 15, we are projecting the sales that will eventually surface from December If you would like to use or quote this report on the web, we ask that you quote the source as Manhattan 2018 Year-End Sales Report by Ariel Property Advisors and link report from our website page arielpa.nyc/investor-relations/research-reports. Location Definitions: Manhattan - South of East 96th Street and South of West 110th Street Northern Manhattan - North of East 96th Street, North of West 110th Street The Bronx - Bronx Borough Brooklyn - Brooklyn Borough Queens - Queens Borough COMPLIMENTARY ASSET EVALUATION Please call us at to request an Asset Evaluation Whether you are considering selling your building or you just want to know the current market value of your property, we are available to provide you with a complimentary asset evaluation. Produced by the joint efforts of our investment sales and investment research teams, an Asset Evaluation will provide you with a thorough analysis of your investment property and will detail our future marketing efforts on your behalf. The information contained herein has either been given to us by the owner of the property or obtained from sources that we deem reliable. We have no reason to doubt its accuracy but we do not guarantee the accuracy of any information provided herein. 5 February 2019