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New York Apartment Building Sales Jump in a Bet on the City’s Comeback

Multifamily transactions were up by 53 percent last year compared to 2020, according to a report by Ariel Property Advisors.

(Bloomberg)—The market for New York City apartment buildings reignited in 2021 as a glimmer of normalcy appeared on the horizon for investors.

There were 386 multifamily transactions, up 53% from 2020, according to a report by Ariel Property Advisors. The dollar volume of those deals was about $8 billion, a 72% increase.

In Manhattan, buyers took advantage of prices that remain low relative to the past decade, even as rents jumped 24% from 2020, nearing pre-pandemic levels, the brokerage said.

Demand for rental buildings is bouncing back from the depths of the pandemic, when New Yorkers left the city in droves. Investor appetites also dimmed after the passage in 2019 of restrictive state laws governing older, rent-stabilized buildings. Last year’s gains, which came as the city’s apartments filled up again, show buyers are throwing in their lot with those betting on New York’s comeback.

“The multifamily market in 2021 has really done a 180,” Shimon Shkury, president of Ariel, said in an interview. Demand has increased dramatically and investors expect prices in 2022 to jump far above last year’s, Shkury said.

In Manhattan, smaller deals dominated: About 57% of transactions involved buildings priced from $5 million to $20 million.

Individual international investors played a particularly active role, jumping on the chance to buy while the dollar is relatively weak. Institutional investors are expected to return in a big way this year as prices appreciate, Shkury said.

Market-rate buildings were the more-popular trade, with affordable housing accounting for about 25% last year’s dollar volume. That share may rise now that investors have pricing clarity under the new rent laws, according to Ariel.

Citywide, multifamily deals are still well below the $11 billion mark reached in 2018, before the current rent rules were enacted.

© 2022 Bloomberg L.P.

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