New York City Commercial Real Estate Sales Activity Remained Flat in Q1

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According to Massey Knakal Realty Services' first quarter 2010 Property Sales Report for the greater New York City area (Manhattan, Northern Manhattan/Bronx, Brooklyn, and Queens); the total number of properties sold citywide in Q1 was 373, up 2.8% from the 363 properties sold in Q1, 2009. This total of 373 properties sold was down 6.3% from the 398 total properties sold in Q4, 2009. Q1 activity also remained 72% below the 1,353 sales occurring in the peak Q1, 2007.

"While a significant increase in market activity was anticipated in Q1, it appears that the New York City property sales market overall has remained flat from 2009 levels, although sales activity varied widely borough to borough," said Massey Knakal Chairman and Founding Partner Robert A. Knakal. "It is important to note however, that building sales data is always a lagging indicator of market conditions and the trend towards improving conditions since late 2008 / early 2009 continues," added Knakal.

Within the different market segments Massey Knakal tracks, clearly Manhattan has been the best performing thus far in 2010. The 99 sales (occurring south of 96th Street on the east side and south of 110th Street on the west side) represent a 98% increase from the 50 total sales in 1Q09, but a 12% decrease from the 112 sales in Q4, 2009. The borough with the least activity was Brooklyn in which there were only 107 properties sold in Q1, 2010, down 24.6% from the 142 sales in Q1, 2009 and down 11.6% from the 121 sales in Q4, 2009.

For dollar volume, the best performing area was Northern Manhattan which saw a 197% increase in activity from Q1, 2009 and a 51% increase from Q4, 2009. Brooklyn was the weakest performer with $162 million of sales in Q1, 2010, down 23% from Q1, 2009 and 41% below the $274 million of sales in Q4, 2009.

The highlights from each report include the following:

Manhattan (south of 96th Street on the east side and south of 110th Street on the west side)

• There were 99 Manhattan properties sold in Q1, 2010, which was up 98% from Q1, 2009, but down 12% from Q4, 2009 and down 63% from the peak Q1, 2007.
• Aggregate sales consideration in Q1, 2010 was approximately $1.5 billion, up 0.2% from Q1, 2009 ($1.5B) and up 51% from Q4, 2009, but down 91% from the peak Q1, 2007 ($17.2B).
• There were five (5) sales over $100M in 1Q10, whereas there were only seven (7) in all of 2009.

Brooklyn

• There were 107 Brooklyn properties sold in Q1, 2010, which was down 25% from Q1, 2009, down 12% from Q4, 2009 and down 80% from the peak Q1, 2006.
• Aggregate sales consideration in 1Q10 was approximately $162M, down 23% from Q1, 2009 ($209M), down 41% from Q4, 2009 ($274M), and down 86% from the peak Q1, 2006 ($1.1B).

Queens

• There were 91 Queens properties sold in Q1, 2010, which was down 13% from Q1, 2009, down 5% from Q4, 2009, and down 70% from the peak Q1, 2006.
• Aggregate sales consideration in Q1, 2010 was approximately $143M, down 21% from Q1, 2009 ($181M), down 32% from Q4, 2009 ($211M), and down 82% from the peak Q1, 2008 ($775M).

Northern Manhattan (north of 96th St. east of Central Park and north of 110th St. west of Central Park)

• There were 35 Northern Manhattan properties sold in Q1, 2010, which was up 94% from Q1, 2009 and up 25% from Q4, 2009, but down 57% from the peak Q1, 2007.
• Aggregate sales consideration in Q1, 2010 was approximately $117M, up 197% from Q1, 2009 ($39M) and up 51% from Q4, 2009 ($78M), but down 80% from the peak Q1, 2006 ($580M).

The Bronx

• There were 41 Bronx properties sold in Q1, 2010, which was down 15% from Q1, 2009, down 79% from the peak Q1, 2007, but even with Q4, 2009.
• Aggregate sales consideration in Q1, 2010 was approximately $70M, down 13% from Q1, 2009 ($80M), down 7% from Q4, 2009 ($75M), and down 93% from the peak Q1, 2007 ($932M).

"While the volume of sales has been relatively flat, we expect volume to rise over the next few quarters as pent up and overwhelming demand continues to outpace the supply of available properties for sale. This dynamic will exert upward pressure on values. However, as the supply of distressed assets continues to climb, this addition to supply will exert downward pressure on value. Whichever factor becomes dominant will determine the direction of value moving forward," said Knakal.

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