CRE investors in Manhattan are starting to become more active. The city had 80 transactions in the third quarter, with a transaction value of $3.2 billion, according to the Avison Young Real Estate Sales Report. These two categories increased by 29% and 16% respectively from the June quarter.
And the recent activity is a vote of confidence for Avison Young, which now expects Manhattan investment sales transactions to increase 16% year over year in 2024, with total transaction volume increasing 76%.
“Many believe the market is starting to shape up for the final quarter of 2024,” the CRE firm wrote.
The company was led by development sales in the third quarter, which totaled $824.7 million, an increase of 194 percent over the three months ended June and 191 percent year over year. Related recorded the largest transaction in this category with its $632.5 million acquisition of 625 Madison Avenue.
Conversion activity was also successful, with total sales of $519 million, an increase of 59% from Q2. Additionally, sales increased by 120% to 11 items.
In retail, healthcare volumes increased 22%, with sales reaching $318.1 million and transaction value increasing 100%. However, the price per square foot fell 32% to $1,207.
However, activity was negative in some sectors. Office sales were down 25% to $794.5 million, but up 58% year-over-year, with price per square foot up 2% to $382. Multifamily and mixed-use sales decreased 11% to $717.4 million. Price per square foot fell 2% to $574.
The cap rate is the highest in the retail sector at 6.98%. This is followed by apartment buildings at 5.59% and offices at 4.58%.
Avison Young is optimistic about strong real estate sales growth in 2024, but also points to some notable trends. This includes office-to-residential conversion and the impact of September’s interest rate cut.
