New York City Building Sales Drop 75% in 2009, Reports Massey Knakal Realty Services

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(NEW YORK, NY) -- Massey Knakal Realty Services released this week their year-end Property Sales Report for 2009 that shows the total volume of commercial real estate sales in the New York City marketplace was $6.3 billion, which was down 75% from the $25.3 billion in 2008 and 90% below the 2007's record of $62.2 billion. There were 1,224 transactions closed which consisted of 1,439 properties, representing 0.87% in turnover.

This report provides a comprehensive study of the investment sales market by product type in the entire New York City area (Manhattan, Northern Manhattan/Bronx, Brooklyn, and Queens).

Northern Manhattan had the most turnover with a 1.33% rate, while Brooklyn had the lowest at 0.73%. The average transaction size of a New York City building was $4.4 million in 2009, down from $8 million in 2008 and the $12.4 million peak experienced in 2007. Manhattan clearly had the highest average transaction size at $13 million in 2009, down from a peak in 2007 of $52.5 million.

Brooklyn and Queens tied for the lowest average transaction size at $1.7 million. Brooklyn and Queens had previously peaked at $2.0 million in 2007. The most adversely affected market in terms of pricing was Northern Manhattan where values on a per square foot basis fell between 39.4% (for elevator apartment buildings) and 55.1% (for walk up apartment buildings) from their peak, while Brooklyn faired best falling only 5.3% (for elevator apartments) to 21.7% for walk up apartments.

The highlights from each report include the following:

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

• Transaction volume of $4.2 billion down 79% from 2008 and 92% from peak in 2007

• The trend towards smaller transactions continued  as evidenced by 85% of transactions were less than $25 million - in fact, only seven transactions were greater than $100 million

Brooklyn

• Transaction volume of $797 million, down 61% from last year and 79% from 2007 peak

• 476 properties traded in 2009 representing a turnover of  .73%, mixed use buildings accounted for 32% of the turnover

• Pricing, on a per square foot basis, declined (from peak) 21.7% for walk-up apartments, 10.2% for mixed use but only 5.3% for elevatored apartment buildings

Queens

• Transaction volume of $586 million, down 69% from last year and 77% from 2007 peak

• 345 properties traded in 2009 representing a turnover of  .79%, mixed use buildings accounted for 24% of the turnover

• Pricing, on a per square foot basis, declined (from peak) 21.1% for walk-up apartments and 16% for mixed use

Northern Manhattan

• Transaction volume of $298 million, down 55% from last year and 80% from 2007 peak

• 92 properties traded in 2009 representing a turnover of 1.32%, walk up apartment buildings accounted for 28% of the turnover

• Pricing, on a per square foot basis, declined (from peak) 55.1% for walk-up apartments and 39.4% for elevatored apartment buildings

The Bronx

• Transaction volume of $400 million, down 57% from last year and 82% from 2007 peak

• 202 properties traded in 2009 representing a turnover  of .94%, elevatored apartment buildings accounted for 35% of the turnover

• Pricing, on a per square foot basis, declined (from peak) 38.4% for walk-up apartments and 19.1% for elevatored apartment buildings.

"While there is still upward pressure on capitalization rates, we have seen increases in average prices per square foot in the 2H09 due to higher quality assets coming to the market and a bounce off of, what we assume to be, an overshot to the downside," said Massey Knakal Chairman and Founding Partner Robert A. Knakal.

"While we do not see these increases as a clear indication that we have reached an absolute bottom, we do believe that the market is in the process of "bottoming," added Knakal.

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