Avison Young releases 2Q20 Property Sales Report for Manhattan
Unprecedented halt in sales activity due to COVID-19 results in
lowest quarterly volume since the third quarter of 2009
New York City – Manhattan saw an unprecedented halt in investment sales activity in the second quarter due to COVID-19, falling to its lowest level since the third quarter of 2009, according to Avison Young’s 2Q20 Property Sales Report for Manhattan.
The quarter tallied 30 transactions and $753 million in total dollar volume, down 56 percent and 83 percent, respectively, from the trailing four quarter average.
“In normal markets there are enough data points to project market pricing trends,” said James Nelson, Principal and Head of Tri-State Investment Sales for Avison Young. “However, with few data points, combined with the long nature of a real estate transaction, there were not enough transactions to say definitively what pricing correction may result from this period.”
With COVID-19 decimating the second quarter, combined with an already sluggish first quarter, the first half of the year recorded just 96 transactions and $5.17 billion in total dollar volume. Annualizing this pace, Manhattan is on track for 190 transactions and $10.3 billion in total dollar volume, which is 66 percent and 63 percent of the 10-year average, respectively.
Avison Young’s 2Q20 Property Sales Report for Manhattan includes the following break-down by asset class:
The second quarter of 2020 recorded only 14 multi-family and mixed-use sales combining for a total of $151 million in total dollar volume – yet was nearly half of the total transaction count. This represents a 55 percent decrease in transaction volume and 77 percent decrease in dollar volume, respectively, off the trailing four quarter average. While pricing per square foot remained steady at $868, cap rates increased by 33 basis points off the trailing four-quarter average – which is based off a smaller than usual sample size. For the first half, sales totaled 40 with $962 million in dollar volume, if annualized, this would be 80 sales and $1.92 billion, which would equate to 33 percent and 23 percent decline off 2019 totals.
Coming off a strong first quarter, the office sales market was nearly non-existent in the second quarter. There were four transactions totaling $145 million in dollar volume. This is a 68 percent decrease in transaction volume and 94 percent decrease in dollar volume off the trailing four-quarter average, respectively. For the first half, there were 17 sales for $3.15 billion in total dollar volume, if annualized, this would be 34 sales and $6.3 billion, which would equate to 24 percent and 34 percent decline off 2019 totals. The leading transaction for
the quarter was The Park Avenue South Portfolio, 114 East 25th Street and 331 Park Avenue South, which was sold by The Prodigy Network for a collective $82.5 million, $921 per square foot.
We saw an increase in the activity in the development market in the first quarter, but only saw two transactions in the second quarter. For the first half, there were 14 sales for $632 million in total dollar volume, if annualized, this would be 28 sales and $1.2 billion, which would equate to a 7 percent and 11 percent decline off 2019 totals. The leading transaction for the quarter was 410 Madison Avenue, which JP Morgan Chase purchased from The Bank of China for $115 million. The lot allows for 107,500 buildable square feet, equating to $1,070 per buildable square foot. The two parties entered contract in 2018 so the price may not reflect current market conditions.
In the second quarter, the retail market saw five transactions for a total of $256 million in dollar volume. This represented a 41 percent decrease in transaction volume and an 81 percent increase in dollar volume, respectively, off the trailing four-quarter average. For the first half, sales totaled 14 with $322 million in dollar volume, if annualized, this would be 28 sales and $645 million, which would equate to a 26 percent and 11 percent decline off 2019 totals. The increase in dollar volume is skewed due to the leading transaction of the quarter, 609 Fifth Avenue, where the sale price was greater the trailing four-quarter average alone. The three-story retail condo, in which Puma is the main tenant, was sold by SL Green to Rueben Cos for $168 million equating to $5,822 per square foot and a 5.00 percent cap rate.
To read the full report, please click here.
Avison Young is the world’s fastest-growing commercial real estate services firm. Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and operated by its Principals. Founded in 1978, with legacies dating back more than 200 years, the company comprises thousands of real estate professionals in more than 100 offices around the world. The firm’s experts provide value-added, client-centric investment sales, leasing, advisory, management and financing services to clients across the office, retail, industrial, multi-family and hospitality sectors.
Avison Young is a 2020 winner of the Canada's Best Managed Companies Platinum Club designation, having retained its Best Managed designation for nine consecutive years.
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