NYC Multifamily Sales Volume Plummets 95% from Mid-2007

The bank stress tests are in and have provided some relief to Wall Street, the stock market has picked up a little—relative to early this year—and the constant barrage of bad news has given way to some good news. And even though every economic indicator for New York City was negative in the first quarter, the rate of decline slowed considerably from the fourth quarter of 2008.

Schreiber However, nothing suggests that the overall climate is starting to improve: job losses have been steady and property sales volume declined for the seventh straight quarter. The commercial sales market in New York remained on life support in the first quarter of 2009 and volume of multifamily sales declined nearly 40 percent since the fourth quarter of 2008, which was already a five-year low, according to a recent New York market report conducted by Eastern Consolidated, CoStar and Property Shark.

“The economy is likely riding the bottom of a “U”-shaped recovery, but the extent to which we remain in this position is not clear,” says Barbara Byrne Denham, chief economist, at Eastern Consolidated, who heads the company’s research operations.

With just less than $200 million in multifamily transactions, the volume has plummeted 95 percent from its peak in mid 2007. The largest sale was the mixed-use Garment District building at 488 Seventh Avenue that sold for $45.3 million, which worked out to $510 per square foot. Only four other transactions greater than $10 million were traded in the quarter.
“Confidence in general economic conditions has improved in recent weeks as the banks have conveyed an overall sense that the worst is behind them. Many have confused this positive development as a sign of improvement when it really is not,” says Denham.

The downward momentum in the economy may be slowing but it is still negative: job losses will continue and the volume of property sales will not likely pick up in the next quarter or two, the report finds. The securities industry lost 18,100 jobs, all based in New York City, since November 2007. “If the securities industry losses are any indication, this recession may not be as bleak as many had foretold,” Denham concludes.