Multi-Family Product

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It is evident that cap rates expanded in 2010 from 2009 levels as value hit its trough toward the end of the 2010 calendar year.  The 2011 results and feedback show that the cap rate compression has back in full swing and the multifamily marketplace is the most desirable product across the board with the most favorable and abundant financing available.

In Queens, the elevator apartment building dollar volume in 2011 was $193M, an increase of 150% from 2010.  Only 12% of that figure occurred in the 2nd half of 2011 due to an overall lack of supply.  In 2011, 13 elevator apartments building sold which is equal to the volume in 2010.  Cap rates of these properties averaged 5.6% in 2011 which is down 45 basis points from 2010, gross rent multiples was up from 9.5x in 2010 to 10.71x in 2011.  The price per square foot in the elevator segment averaged $193 up 10% from 2010.

The walk-up apartment buildings inQueenswere slightly less impressive as the elevator product.  Dollar volume for walk-ups in 2011 was $100M which was a slight increase from the previous year.  In 2011, 62 properties sold down 9% from 2010.  The second half of 2011 showed an 18% drop from the first half, again showing a supply constraint.  Cap rates averaged 6.8% down 75 basis points from 2010, GRM decreased to 9.5x from 9.8x in 2010.  The price per square foot for walk-up apartment buildings in 2011 averaged $187 down 7% from 2010.

Our Massey Knakal Queens office sold several elevator and walk-up apartment buildings in 2011.  The prices ranged from $1,500,000 up to $58,000,000.  Regardless of the price range, condition, or any other characteristic of these properties, we attained dozens of offers on each with a constant flurry of activity and interest.  There is simply not enough multi-family supply for sale for the existing pent-up demand.  This equates to aggressive pricing and a favorable market for those owners who wish to sell their apartment buildings over the next several months.