Queens Multi-Family Market Report 6-1-2016
According to a recent market report by Justin Liniado – Associate Director of Multifamily at CPEX, investment sales in the Queens multi-family market saw a year of strong, steady growth in 2015. Rising market rents and a steady increase in condo and commercial transactions has proven to be a supportive market for business, residential development and capital investment.
Currently, Long Island City, Jamaica and Flushing are the most active neighborhoods in Queens. Astoria, Ridgewood, Elmhurst and Corona have also been extremely active submarkets in Queens investment sales, with multi-family assets in these neighborhoods accounting for 32% of the borough’s total dollar volume. With easily accessible public transportation, potential developers and investors are targeting these neighborhoods.
Multi-family transactions in Queens surpassed 330 transactions for 2015, a 48% increase over transactional activity in 2013. Multi-family properties saw a 9% increase in gross dollar volume compared to the previous year, even though the transaction and dollar volume decreased slightly year over year. This clearly shows that the market is experiencing an increase in overall property value.
These increased numbers demonstrate the elevated interest in the Queens multi-family market. As demand continues to outpace supply, cap rates in the borough have dropped to an average of 4.71%, on par with Brooklyn, and the average price per square foot has increased to $284. With interest rates remaining relatively low in 2016, the market will continue to see a rise in property values, particularly in the multi-family sector.
|Year||Transactions||$ Volume||SF Sold||PPSF|
Investment interest in Astoria wavered slightly toward the end of 2015, with only 31 transactions and $38 million of volume in the fourth quarter. Despite these relatively low numbers, Astoria is still experiencing a huge boom in development and a new residential wave. We expect a steady increase in values, currently averaging $321 per square foot and $289,000 per unit. Most of the recorded transactions were small assets (less than 10 units) with an average sale price of $1.1 million, or medium-sized assets (10-50 units) with an average sales price of $5 million.
- Long Island City
Long Island City was one the first neighborhoods to be affected by the huge wave of luxury and retail development, and multi-family assets have seen a steady increase in value as a result. There were a total of 34 transactions in 2015, most of which (29) were small- or mid-sized buildings. Those 29 properties sold for an average of over $350 per square foot and $275,000 per unit, an indication of LIC’s rising popularity. Larger assets saw a steady number of transactions with an average price per square foot of $541, price per unit of $440,000, and average sale price of $55 million. We expect to see a slight increase in activity in the multi-family market to make way for new development.
Flushing, Queens has been one of the more active neighborhoods in recent years. With a high concentration of multi-family assets and a multitude of retail and commercial development, investors and residents are beginning to see the appeal to Flushing. In the fourth quarter of 2015 alone, Flushing experienced $172 million in transactions, a 350% increase compared to the same period in the previous year. Although the number of transactions declined, values increased to an average price per square foot of $278 and an average price per unit of $256,000. We expect the market will still experience small fluctuations as we approach the second quarter, but overall values will continue to rise alongside newly completed developments.
Jamaica, one of the more well-known neighborhoods of the borough, has been a hub for investors and residents for many years. Due to its short commute to JFK and the constant development of its business district, the market has seen consistent activity in investment sales. Jamaica saw an increase of almost 400% in the fourth quarter of 2015 with $42 million worth of transactions, with both average price per square foot ($208) and average price per unit ($153,000) increasing year over year. Average sale prices ranged from $563,000 for smaller sized assets to $17.5 million for larger assets. As development continues to increase in Jamaica, investment activity and steady growth will follow suit through 2016.
- Jackson Heights
Jackson Heights has already shown strong activity for the past two years and it isn’t showing any signs of slowing down. The fourth quarter of 2015 showed tremendous growth in sales volume ($64 million), an 88% increase from 2014. Values increased on both a price per unit ($219,000) and average price per square foot basis ($253). Both small and large assets dominated the fourth quarter of 2015 with 95% of the transactions and an average sale price of $3.3 million. With several new buildings and retail condos in the pipeline, the outlook for a very active 2016 in Jackson Heights remains strong.
Note: For the purposes of this report, small-sized properties refer to buildings with 10 units or less; medium- or mid-sized assets include buildings with between 10 and 50 units; and large or largescale buildings include upwards of 50 residential units.
Ridgewood is quickly becoming the new haven for multi-family investors, with more residents looking for an affordable option outside of the Brooklyn and Manhattan markets. In the final quarter of 2015, the Ridgewood market saw double digit increases in both sales volume (48% increase to $69 million) and transactional volume (10% increase to 57 sales). Multi-family values rose along with the heightened activity in the Ridgewood market, up nearly 20% for both the average price per unit ($235,000) and average price per square foot ($269). Since Ridgewood’s housing stock consists of mostly smaller multi-family assets, most of the fourth quarter transactions for 2015 sold for an average of $1.3 million, with the remaining sales comprising medium-sized assets at an average sale price of $10 million. As demand continues to grow in Ridgewood, investors and sellers will continue to see steady increase in both sales volume and values.
With its great housing density, Elmhurst is poised to emerge in the Queens multi-family market. While the development market currently lags behind other popular areas such as Astoria and Long Island City, activity should quicken as more residents and retail move in. In the fourth quarter of 2015, Elmhurst saw $41 million in sales volume and 21 sales transactions, with the average price per unit ($222,000) and the average price per square foot ($247) both showing slight growth compared to the previous quarter. Average sale prices for small-sized assets fell just shy of $1 million, while $20 million was the average going rate for buildings with more than 50 units. As developers look to Elmhurst as their next target market, we expect activity will pick up during the third quarter in conjunction with a growing development pipeline.
Corona is one of the more exciting up-and-coming neighborhoods in the borough. With its central location and its proximity to major public arenas such as Arthur Ashe Stadium and Citi Field, Corona is poised to become a major hub for investors and developers. Consisting mostly of small and medium multi-family assets, Corona had 20 transactions for about $85 million in sales for 2015. Sales averaged $195,000 per unit and $228 per square foot, with all signs pointing to a steady incline in activity in Corona. With the average sale price at $1.8 million, Corona is clearly emerging as a competitive submarket alongside other more highly touted neighborhoods in Queens. Corona should see impressive sales totals in 2016 as activity starts to increase and a retail presence becomes more prevalent.
Consisting mainly of small- and medium-sized multi-family assets, the neighborhood has experienced under-the-radar growth the past couple of years, but investor attention is turning to Sunnyside in 2016. Last year, Sunnyside showed its greatest growth yet with $40 million in sales during the fourth quarter alone, which equates to a 325% increase over the last three months of the previous year. With sales volume at an all-time high, the average price per unit ($221,000) and average price per square foot ($289) also grew substantially as a result. Sunnyside will soon become one of the more desirable neighborhoods in Queens, and 2016 will signal its arrival.