MNS Real Impact Real Estate

Introduction

MNS is proud to present the First Quarter 2013 edition of our New Development Market Report.

New Development Sales data, defined as such “Arms-Length” first offering transactions where the seller is considered a “Sponsor”, was compiled from the Automated City Register Information System (ACRIS) for sponsor sales that traded during the First Quarter of 2013 (1/01/13 – 3/31/13). All data summarized is on a median basis.

Market Snapshot

Year-Over-Year Median PPSF - down 6%
Quarter-Over-Quarter Median PPSF - up 4.8%

Year-Over-Year Median Sales Price - up 20%
Quarter-Over-Quarter Median Sales Price - up 1.8%

Manhattan New Development Sales Inventory - down 53.94% from last quarter
Neighborhood with the Most New Dev Sales: Harlem (17% of Manhattan new development sales)

Total New Development Sales Volume - down 58.41% to $340 Million from $819 Million in 4Q12

Largest Quarterly Up-Swing: Midtown West
PPSF $1,514/SF from $1,308/SF

Largest Quarterly Down-Swing: Gramercy Park
PPSF $1.202 from $1,808
Sales Price $1,195,000 from $2,240,150

Highest New Development Sale:
106 Central Park – 21A-D - $14,250,000

Highest New Development Sale PPSF:
276 Central Park West – PH5A - $3,045.59/SF

Market summary:

As frequently discussed throughout national media outlets and the MNS 4Q12 New Development Report, the market was replete with inventory due to uncertainty in Washington over possible tax increases. As a result, the previous quarter saw an unprecedented level of transactions. After analyzing the new development activity from January 1st – March 31st, both the level of transactions and total dollar volumes have significantly decreased and returned to their customary levels. However, increased competition from institutional and foreign investors continues to drive up prices throughout Manhattan.

In 1Q13, the total new development sales volume settled at $340 million, representing a 58.41% decrease from the previous quarter of $819 million. Albeit the substantial decrease in activity, overall median sale prices managed to appreciate 1.8% from $1,171,146 in 4Q12 to $1,192,500 at the end 1Q13. Furthermore, the median PPSF increased by 4.8% from $1,096 during the 4Q12 to $1,149 during 1Q13. As mentioned in the previous quarter’s report, 56% of the total 393 transactions surpassed the million dollar figure. During 1Q13, similar units trading over a million dollars represented only 52% of the total 181 transactions.

Looking back one year ago to 1Q12, overall median prices have increased by an impressive 20%. However, the overall PPSF has decreased by 6 percent during the same time frame. Another noteworthy statistic to mention is Soho’s two year median sales price increase - at a whopping 137%.

Market up-swings:

Having experienced a relatively slow previous quarter, Midtown West has rebounded with a 15.7% increase in price per square foot. One particular building, 106 Central Park South, closed a couple transactions with an average sale price of $7.85 million, while achieving a PPSF or $2,646. As mentioned earlier, the highest development sale was completed at 106 Central Park South, thus supporting the neighborhoods rebound. The overall median sales price also increased 21.7% from the previous quarter. However, when excluding the previous quarter, the median sale prices are comparatively level with both 2Q12 and 3Q12.

Tribeca continues to foster and maintain its recent PPSF growth while achieving a 12% increase from the previous quarter. Not including 4Q12, Tribeca has experienced 4 consecutive quarters of negative growth (both median PPSF and median sales price) from 1Q12 until the end of 4Q12. Current median sale prices of $1.4 million are significantly lower than the highs of $5.9 million achieved during 4Q11, but the outlook remains positive. One particular project under construction, 56 Leonard Street, is anticipating PPSF in the 2-3k range. Once the recent transactions are authorized and confirmed by city sources, MNS will factor these figures into the 2Q13 report.

Market down-swings:

Having experienced substantial increases of 27% (ppsf) and 73% (median sales price) during 4Q12, the Upper East Side reverted back to anticipated levels during the current quarter. In addition, two units priced above $7 million traded hands during 4Q12, however, the most expensive unit sold during 1Q13 was over $6 million. Depending on the handful of proposed developments, especially along 1st Avenue, the Upper East Side should remain an interesting sub-market to closely track.

Inventory analysis:

As mentioned earlier in the report, the overall volume of sales has decreased by 53.94%, from 393 sales in the previous quarter to a total of 181 in the current quarter Both the Upper East Side and Harlem had the greatest number of total sales with 30, representing over 33% of the total sales in Manhattan. On the contrary, Gramercy Park, Greenwich Village, and the East Village only had 1 transaction each.

In tracking the neighborhoods that sold the most amount of 1Q13 new development inventory per unit size:

Studios - Financial District (24%)
One Bedrooms - Harlem (21%)
Two Bedrooms - harlem (25%)
Three Bedrooms - Upper West Side (29%)