Manhattan Investment Sales on the Rise, Led by Retail Sector

Investment sales in Manhattan rose to $5.8 billion over 167 transactions in the first half of 2024, an increase of 14% and 16%, respectively, compared to the second half of 2023, according to Ariel Property Advisors’ Manhattan 2024 Mid-Year Commercial Real Estate Trends report. Although multifamily represented the largest number of transactions at 90 sales, retail’s dollar volume was greater, thanks to acquisitions by luxury retailers.

“In the first half of 2024, we saw investor sentiment in Manhattan shift noticeably from the second half of 2023’s more conservative approach,” said Howard Raber, director of Ariel Property Advisors. “Consequently, sellers facing mortgage maturities and distress began making tough decisions about their assets and buyers capitalized on the lower prices.”

For multifamily in particular, average pricing dropped by 15% from $722 per square foot to $611, while average cap rates increased from 5.24% to 6.19%. Predominantly free market buildings sold for just $679 per square foot, the lowest level since 2013.

Added Ariel founding partner Mike Tortorici, “The office market also showed signs of improvement in 1H 2024 driven by a number of owner-user purchases. Additionally, the development market improved with approximately 50% of Manhattan’s $1.1 billion development sales reportedly slated for office to residential conversions. This trend is a direct result of initiatives put forward by both the city and the state to make conversions more feasible to help combat New York City’s housing shortage.”