The Queens, New York Multi-family sales market has to be one of the least reported topics within our industry. I’m going to try to put a dent in that fact with this article. I hope you enjoy the read and find it very informative. Let us look at data we have compiled for the Queens Multifamily market for 2010:
From January 1 2010 – November 1 2010, in the Multi-Family sub-market of Queens, NY, for 12 Family buildings and above, there have been twenty-two (22) transactions consisting of twenty-six (26) apartment buildings containing 1,095 residential units and 12 commercial units for a total of 1,107 Units. The total Gross Square Footage for all of these buildings is 865,775SF. These buildings traded for a total dollar volume of $132,846,965
These sales represent a turnover rate of about 1.2%*; already up from the entire year of 2009 Queens multi-family sales, by approximately 35%. This submarket of Queens is on track to finish the year with a turnover rate of about 1.4% (a 47% increase from last year), far from 2008 when the turnover rate was a record breaking 3.43% of multifamily stock in Queens; but a relief from 2009’s record low 0.74% turnover rate.
Thirteen (13) of these transactions consisting of sixteen (16) buildings and 409 units are Walk-up apartment buildings with an Average Price Per Unit of $121,473/unit and an Average Price Per SF of $175.93/SF. The Average Capitalization Rate for Walk-up apartment buildings in Queens, NY so far this year is 6.32% and the Average Gross Rent Multiple is 9.93X.
Nine (9) of these transactions consisting of ten (10) buildings and 698 units are Elevator Apartment Buildings with an Average Price Per Unit of $125,478/unit and an Average Price Per SF of $162.73/SF. The Average Capitalization Rate for Elevator apartment buildings in Queens, NY so far this year is 6.56% and the Average Gross Rent Multiple is 8.96X.
The average cap rate and gross rent multiple numbers can be deceiving in this borough. The reason for this is that Queens is very diverse. Each neighborhood is completely different as far as demographics and investor appetite go. The cap rates, GRM’s and the price per unit, vary so much on the neighborhood the building is located. The lowest GRM in all of these sales in Queens is under 6X gross rent and the highest was about 12.5X gross rent. A number of other factors do come into play of course, but location plays a crucial part in determining value. The most sought after neighborhoods in Queens are (not in any order): Forest Hills, Rego Park, Astoria, Long Island City, Sunnyside, Woodside, Bayside, Briarwood, Flushing, Elmhurst and Jackson Heights. These areas will always command some of the higher pricing in the borough.
Investor desire for multi-family product in prime areas of Queens should not be underestimated. I currently have a few multifamily buildings in the Astoria/Long Island City neighborhoods of Queens that I am exclusively handling. All of these buildings are scheduled to close before the end of this year at levels of between 10.5X gross rent and 14.1X gross rent. Most of these properties go under hard contract within 30 days of marketing and all receive at least 25 qualified offers during marketing.
In my own experience this year, investors are purchasing every one of these prime apartment buildings with “As is, Where is”, ALL CASH (no finance contingency) terms. We have also had bidding wars and have needed to implement bid deadlines in some of these transactions; A much different environment from last year. Despite claims from investors looking to knock down pricing, banks ARE aggressively lending on multifamily in prime areas of Queens. The rates are still at historic lows and the underwriting process (appraisals, environmental, etc…) has been nothing out of the ordinary.
Multifamily sales in Queens have picked up for several reasons this year. One of the main reasons some sellers are selling this year, is to take advantage of the current “lower” capital gains tax, which is set to expire as the bush tax cuts sunset. 2011 and beyond should see the capital gains tax rise from the current 15% to 20%. When you add the 3.8% Medicare tax that will be levied on investment income starting in 2013, this will bring the total capital gains tax rate to at least 23.8%.
With what I am seeing on the ground, owners of multifamily buildings in desired areas of Queens, control the market. I believe for them, it is still a “sellers market”, and that will continue to hold true in the months ahead. To make sure this stays this way, keep an eye on Albany and local laws, as well as the unemployment numbers. There is legislation that has been and will always be proposed, by anti-landlord advocates, to adversely affect all apartment building owners in New York City. Thankfully for multifamily owners and our industry, so far, they have not been entirely successful. I will keep you posted. I hope you enjoyed the read. To a prosperous end to 2010 and an even better 2011.
NY Building Sales 
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