Considering that this year’s $9.4 billion dollar of annualized New York City investment sales is only 24% of the 10-year average, you might say that any buyer is a contrarian. That said, there are sales that are happening in New York City. For 2023, 469 annualized to be exact. In this case, only half the 10-year average, but sales, nonetheless. So, who are these opportunistic buyers stepping up in these uncertain times?
Our tri-state investment sales team breaks them up into these categories: 1) High net worth (HNW)/Private, 2) Foreign, 3) End Users, and 4) Institutional/REITs. It is dually noted that foreign buyers can also be HNWs or end users, but for tracking purposes we put them into one bucket.
What’s interesting is that we have seen a dramatic shift in buyer profile from 2022 to 2023. This is in large part to the debt market and the uncertainty in the office market, which has put most institutional buyers on the side lines. Furthermore, it has played to the strengths of HNWs and foreign buyers who are generally cash buyers.
When comparing Avison Young’s Tri-State Investment Sales team’s 50 sales last year to our 34 sales year to date, here is the shift:
These aren’t far off Real Capital Analytics’ figures for NYC:
Even though Real Capital Analytics didn’t track a jump in overall NYC sales for private buyers, there was a dramatic uptick when looking at sales in the outer boroughs. Here, the percentage of buyers jumped from 69% to 77%. What is most dramatic is the shift to foreign buyers which more than tripled year over year. We have certainly witnessed this trend. We have seen a surge of Japanese private buyers who are investing in multifamily. We have also seen strong interest from a variety of other countries around the world.
What is also very interesting to note in our sales interest is the significant uptick in end user buyers. We have tracked that 90% of vacant retail sales have sold to end users, with Dyson’s purchase on Madison Avenue and Wooster being the most dramatic example. On the office front, end users have been the savior of the market. Hyundai’s purchase of 13-17 Laight Street for $275m is most notable. NYU bought an office building on Lafayette. We also just sold 14 East 52nd Street to investment bank. There are many more examples especially from medical buyers.
With all of this in mind, for those looking to sell a property, especially vacant retail or office space, this year, partner with a broker with a strong marketing program to reach private and foreign buyers.