Manhattan investment sales saw a significant increase in activity in 4Q20 with $2.2 billion in total dollar volume across 44 sales, compared to $1.1 billion in total volume across 21 sales in Q320, according to Avison Young’s Manhattan Property Sales Report for the Fourth Quarter of 2020.

“We are very encouraged to see Manhattan sales volume double from 3Q20 to 4Q20,” said James Nelson, Principal and Head of Tri-State Investment Sales for Avison Young. “With values dipping, we see this as a generational opportunity for buyers to take advantage of cap rate spreads (above the 10-year Treasury) not seen in the last decade.” 

Despite the quarter-over-quarter increase, investment sales dollar volume dropped year-over-year 58 percent and sales fell 45 percent in 4Q20 compared to 4Q19. Manhattan saw just under $8.5 billion in total dollar volume and 160 in property sales in 2020, a decline of 51 percent and 44 percent, respectively, from 2019’s numbers, based off the 10-year average, 2020 dollar volume fell by 66 percent and sales dropped by 70 percent.

The following is a break-down of 4Q20 investment sales activity by asset class:

Multi-Family/Mixed-Use  

The Manhattan multi-family and mixed-use market recorded just over $512 million in total dollar volume and 20 total transactions in 4Q20, a 35 percent increase in dollar volume but a 31 percent decline in transactions compared to the fourth quarter of 2019. Year-over-year, the average price per square foot declined by 15 percent to $834 in 4Q20 and cap rates rose by 51 basis points to 4.85 percent during the same period. For 2020, Manhattan multi-family and mixed-use dollar volume declined by 36 percent to $1.6 billion and sales declined by 42 percent to 69 compared to 2019. The leading transaction for the quarter was MKF Realty’s purchase of 1 Union Square South. Sold by Related Companies, this property traded for just over $211 million, equating to $1,215 per square foot and a 4.25 percent cap rate.

Retail  

The Manhattan retail market in 4Q20 recorded only $60.5 million in total dollar volume from four transactions, a decline of 68 percent and 67 percent, respectively, off 2019’s fourth quarter. Compared to 4Q19, the price per square foot decreased 25 percent to $1,538, and cap rates increased by 40 basis points to 5.62 percent. For 2020, Manhattan retail sales totaled $372 million in dollar volume across 18 sales, a 47 percent and 49 percent decrease, respectively, from 2019. The leading transaction for the quarter was Thor Equities sale of 164 5th Avenue for $40 million, equating to $2,273 per square foot and a cap rate of 4.75 percent.

Office

In 4Q20, the Manhattan office sales market declined by 63 percent to just over $1.4 billion in total dollar volume and fell 67 percent to six transactions compared to 4Q19. For 2020, Manhattan office sales totaled $5 billion in dollar volume across 24 sales, a decline of 47 percent for both metrics compared to 2019. The leading transaction for the quarter was SL Green and the Kaufman Organization’s sale of 410 Tenth Avenue to 601W Companies for $952.5 million, equating to $1,498 per square foot and a 4.60 percent cap rate. SL Green retained a 5 percent interest in the building.

Development  

The Manhattan development market in 4Q20 saw $152.3 million in total dollar volume with 10 total transactions, which was higher than all the transactions in the second and third quarters combined. In comparison with the fourth quarter of 2019, however, this represents a 58 percent decrease in dollar volume, but a 100 percent increase in the transaction count. Development sales in 4Q20 totaled just over 289,000 BSF at an average of $394 per BSF, a decrease of 46 percent and 38 percent, respectively, from 4Q19. Comparing 2020 to 2019, the dollar volume of Manhattan development sales decreased by 18 percent to $925 million while sales were unchanged at 30. The largest transaction for the quarter was 504-510 East 74th Street for $70 million, a property with a total ZFA of 83,005, which equates to $843 BSF. 

Click here to read Avison Young’s Manhattan Property Sales Report for the Fourth Quarter of 2020.