Great news for the Bronx... All signs point to the Bronx GENTRIFYING. The stats don't lie. Rents are rising, property prices are rising, and the population growth is BOOMING! Of coarse it won't happen overnight but the seed has been planted! It's just a matter of time!
With GROWING sales volume and RISING PRICES, 2013 was a very positive year for Bronx commercial real estate market. The year was defined by numerous large multifamily portfolio transactions, significant retail trades and the beginning of several game changing developments that will have a wide impact on the borough for years to come.
In 2013, The Bronx saw 295 transactions comprised of 474 properties totaling $1.674 billion in gross consideration. This represents a 23% increase in transaction volume, a 27% increase in property volume and a 13% increase in dollar volume compared to 2012, which saw $1.479 billion in sales over 240 transactions comprised of 373 properties. 2013 figures also represent a significant jump in transactions and dollar volume from 2011 levels.
Multifamily portfolio owners capitalized on the borough’s positive pricing indicators by selling packages purchased during the downturn. Multifamily investment activity clustered around the western neighborhoods of the Bronx, with Riverdale attracting buyers willing to buy market rate multifamily buildings for a 5 cap and 10 times the gross rent. Overall, multifamily prices in the Bronx reached their highest levels since the last cycle, with average prices per square foot exceeding $100 and prices per unit exceeding $105,000.
With development picking all throughout the city and with several major public private initiatives underway, we expect Bronx development sites to gain more traction in 2014. News outlets are already noting that the South Bronx, or SoBro, is attracting a steady stream of hipsters, luxury loft conversions, and new restaurants. A luxury hotel even opened its doors on East 149th Street in the historic Bronx Opera House.
Public-private partnerships defined the Bronx during the year with the City Council’s approval of the Kingsbridge National Ice Center, which will house nine ice rinks, a 5,000-seat arena, and community space in the long-vacant Kingsbridge Armory, and the MTA’s sale of a site near the intersection of East Gun Hill Road and the New England Thruway, on which developers Grid Properties and the Gotham Organization will build a 260,000-square-foot retail space.
Dollar Volume:
$1.67 billion in sales (13% increase compared to 2012)
Transaction Volume:
295 transactions (23% increase compared to 2012)
Property Volume:
474 properties (27% increase compared to 2012)
Dollar Volume Comparison By Location:
Northwest Bronx 36%
Northeast Bronx 11%
South Bronx 44%
Southeast Bronx 9%
A healthy lending environment, growing population, and a continued focus on borough-wide economic development initiatives give us a
BULLISH outlook for the Bronx in 2014. After some brief commentary on the following page discussing the different types of investment properties sold in The Bronx, this report will provide you with a catalog of notable 2013 transactions.
MULTIFAMILY (APARTMENT BUILDINGS) | The borough’s growing population led buyers to invest in housing in 2013 and multifamily sales dominated the Bronx investment market capturing 59 percent of the borough’s transaction volume and 65 percent of the dollar volume. This sales report, which tracks multifamily sales for buildings worth $850,000 or more, shows 175 multifamily transactions comprised of 283 buildings valued at more than $1 billion dollars, a 25 percent increase in transactions, 30 percent increase in properties sold, and 11 percent increase in dollar volume.
Cap rates fell to 7.71 percent in 2013 from 8.05 percent in 2012, and year-over-year the GRM increased to 7.24 from 7.04, price per square foot rose to $112 from $97, and price per unit in- creased to $106,000 from $90,108.
COMMERCIAL SITES | Investment in commercial sites resulted in 11 percent of the transactions and 15 percent of the dollar volume for the borough. The dollar volume of these deals totaled more than $253 million, which is a 190 percent jump from 2012, but the 38 properties sold in 32 transactions were flat year-over-year.
In spite of the opening of new malls in the Bronx, the borough remains under-retailed and investors have taken note. New players are entering the market from Manhattan and beyond with particular interest in transportation hubs that attract public investment. An example of this interest was the $133.9 million purchase of the 262,000-square-foot, mixed-use Fordham Place at 400 East Fordham Road by Illinois-based Retail Properties of America, a real estate investment trust.
DEVELOPMENT SITES | Development trans- actions generated 24 percent of the borough’s total investment transactions. A total of 72 development, industrial, and garage transactions consisting of 122 properties changed hands, a 33 percent and 22 percent increase, respectively. The total value of transactions was $199 million, which represents a 42 percent decline year-over- year, but land values are increasing with average price per buildable square foot increasing from $30 to $32.
Several major development projects were announced this year. None larger than La Central, a $345 million housing complex with five buildings in Melrose is expected to break ground in 2015 and will include 985 units of affordable housing, a YMCA and a blend of retail and community- oriented space.
December 2-8, 2013 | Urban planners are discussing the future of SoBro, more commonly known as the South Bronx, which been attracting a steady stream of hipsters, luxury loft conversions, and new restaurants. The goal is to support a balanced approach to development before Williamsburg and Long Island City-type towers are built. In the 1970s, the borough lost 21 percent of its population, but added 52,458 residents in the last decade.
The Sunrise Cooperative, which represents 52 auto body businesses slated to be displaced by the Willets Point mixed-use development in Queens, is considering moving the businesses to the Hunts Point section of The Bronx. The group is negotiating with the landlord of a 150,000-square-foot warehouse. The City Council approved the Willets Point redevelopment in October.
December 9-15, 2013 | A tentative agreement was reached with the Bloomberg administration to build a $350 million, 28,000-seat professional soccer stadium for a new team, the New York City Football Club, on 10 acres south of Yankee Stadium in The Bronx. However, the New York Times reported that a spokeswoman for Mayor-elect Bill de Blasio said his administration is concerned about using public funds for projects of this kind.
The City Council voted in favor of transforming the long-vacant Kingsbridge Armory in The Bronx into the Kingsbridge National Ice Center. The 763,000-square-foot facility will house nine ice rinks, a 5,000-seat arena, and community space for local activities and a free after-school program with tutoring and skating lessons. The project’s developer, KNIC Partners, promised to pay at least $10 an hour with benefits or $11.50 an hour without benefits and hire locally.
At the ICSC NY Conference, Marlene Cintron, president of The Bronx Overall Economic Development Corporation, touted the success of retail businesses that have opened in The Bronx and said that more major national retailers are on their way. She also noted that rooms at the Opera House Hotel, the borough’s first boutique hotel which opened last August, are booked. More residents are moving to The Bronx and one of the goals now is to develop mixed-income housing to accommodate everyone.
Officials broke ground on a $17.4 million, six-story development on a vacant lot in the Morris Heights section of The Bronx. The West Tremont Senior Residences on West Tremont Avenue near Grand Avenue will provide affordable housing for seniors and is part of the Bloomberg administration’s affordable housing initiative.
December 16-22, 2013 | Construction began on a new pathway from 132nd Street in the Port Morris section of the Bronx to Randalls Island where residents will enjoy 330 acres of parkland, athletic fields, picnic areas, and other recreational amenities. The $6.9 million pathway is scheduled to open in 2015.
December 29, 2013 | The population of The Bronx rose by more than 67,154 to more than 1.4 million residents between 2001 and 2012, according to the Bloomberg administration’s report card for The Bronx. Since 2002, private sector jobs in the borough have increased by 12.6 percent, or 23,915, and 54,163 units of city-financed affordable housing have been constructed or preserved.
News Archive | Ariel Property Advisors
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