Total commercial real estate deal volume in New York City ticked up 5 percent from the first half to the second half of 2020, while the number of sales increased 11 percent, according to the Real Estate Board of New York. That’s the good news.
The Real Estate Board of New York’s Second Half 2020 Investment Sales Report indicates that during the first six months of the year, 1,356 transactions for a total of $11 billion in consideration were closed.
Unsurprisingly however, year-over-year figures showed the expected pandemic-induced decline in investment activity, marking decreases of 21 percent in the volume of deals and 41 percent in total consideration.
REBNY’s report covers several commercial real estate sectors and subsectors, including office, industrial, multifamily, hotel and retail, as well as vacant land, garages/gas stations/auto and the catch-all category–other. The year-over-year numbers tell the story of the pandemic’s impact on investment activity, but the numbers from the first half to the second half indicate the beginning of the investment market’s movement in a positive direction. Still, the average sales price has yet to recover, continuing its decline in the second half with a drop of 6 percent from the first half of 2020.
In Manhattan, specifically, investment sales transactions dropped 21 percent from the second half of 2019 to the second half of 2020, and consideration declined a whopping 56 percent. Notably, Manhattan saw its average commercial real estate sale price plummet 45 percent year-over-year, while the Bronx, Queens and Staten Island all experienced a remarkable jump in the average price, which skyrocketed a respective 48 percent, 42 percent and 66 percent. In Brooklyn, the average price declined 16 percent year-over-year, while sales transactions dropped 34 percent and consideration decreased by 45 percent.
The New York City office sector, though beleaguered, was significant in the second half of 2020, playing a major role in the final numbers. Office assets across the city recorded the highest levels of decline in transaction volume of all the property types surveyed in the report, with the number of transactions in the second half plummeting 43 percent year-over-year.
The office sector also led the way in the decline in consideration among all built property types, with total sales dropping 64 percent to approximately $2.9 billion. Yet, for all the notable decreases in transaction volume and consideration, the office sector accounted for the greatest amount of investment sales in dollar figures of all sectors.
Excluding the “other” category, the office sector accounted for two of the top three investment sales transactions in the second half of 2020. As noted in the REBNY report, the largest trade of the last six months of 2020 was the $830 million sale of the Sotheby’s owner-occupied New York city headquarters at 1334 York Ave., a roughly 500,000-square-foot building that had been refinanced to the tune of $483 million in the third quarter.
The second-largest transaction was Savanna’s $435 million acquisition of 1375 Broadway, a 465,000-square-foot office tower. And in the third-largest transaction of the second half of 2020, industrial pushed the office sector out of the lead, as the property at 34 Review Ave. in Long Island City in Queens traded for $369 million.
Read the full report by the Real Estate Board of New York.