New York City office market sales volume thus far in the second quarter is well on its way to exceeding first quarter 2016 sales volume, according to Real Capital Analytics.
First quarter 2016 office sales volume in the Big Apple totaled approximately $6.8 billion. And, thus far this quarter, 19 offices have been sold, for a total of more than $6.3 billion. However, the transaction volume during both quarters is down compared with 2015, which saw an average of more than $8.3 billion in sales volume per quarter.
Fourth quarter 2015 had the highest transaction activity since 2013, with a total of nearly $9.8 billion in completed deals. First quarter 2015 had sales volume of $8.1 billion.
The decline in transaction volume for New York City office properties does not necessarily mean a decrease in overall investor activity, even if there is a pullback in Manhattan office deals. According to CBRE’s Americas Investor Intentions Survey 2016, Americas investors will be active this year in both acquisitions and dispositions, and they intend to retreat on the risk curve, becoming slightly more conservative in strategy and risk appetite. Approximately 65 percent of Americas investors intend to be net buyers in 2016, making more acquisitions than dispositions.
And nearly 30 percent of survey respondents selected multifamily as the most attractive property type for investment purchases in 2016. Multifamily moved up from the third favorite property type in 2015. Office and industrial were essentially tied as the second-most favored property types for 2016 investment.
Approximately 208 apartment properties in New York City were exchanged during first quarter 2016 for a total of $4.7 billion. And thus far this quarter, 27 transactions have been announced for a total investment volume of $1.1 billion.
New York City continues to outrank London as the top global city for foreign real estate investment, according to the 24th annual survey taken among the members of the Association of Foreign Investors in Real Estate. However, according to RCA’s Cross-border Capital Tracker, foreign investors have purchased only 10 office assets in New York City year-to-date, representing deal volume of nearly $2.0 billion.
New York City office market transaction volume could be decreasing as investors seek opportunities outside pricey gateway markets.
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Andrea Waitrovich is IREN editor and web content editor of Institutional Real Estate, Inc.
