A New York investment company and a US home developer venture have agreed to pay $ 1.75 billion for six rental condominiums in Manhattan. ..
The planned purchase of a portfolio containing approximately 1,700 predominantly market-priced units by Black Spruce Management LLC and Orbach Affordable Housing Solutions LLC represents a major bet on New York. The transaction shows that demand for rental condominiums in Manhattan remains strong despite rising interest rates, capital market upheavals and recessionary concerns.
Still, the bids for the six towers on Manhattan’s Upper East Side were strong, according to people familiar with the matter. According to people familiar with the matter, a successful bid will result in an initial return rate for the buyer’s building ranging from 3% to 5%. According to analysts, its earnings are much lower than other commercial real estate types, comparable to what investors were paying for rental apartments in New York before interest rates began to rise.
The tower was built between the 1960s and 2018 by prominent New York developer Sheldon Solow, all with doormen. According to the list website StreetEasy, one-bedroom apartments in the building were recently rented for $ 3,900 to nearly $ 7,000 per month, depending on the unit and building. About 15% of the 1,700 units are rented by New York City.
Homes in New York rebounded strongly after home selling prices and rents plummeted after the first outflow of New Yorkers at the beginning of the pandemic. Luxury home sales reached record levels last yearDouglas Elliman reports that the median rent for Manhattan apartments rose to $ 4,000 per month for the first time in May.
Many leases in the six-building portfolio were signed during a pandemic where rent prices fell, leaving room for new owners to generate income by raising rent. Its bullishness contrasts with investors’ attitude towards office properties in New York, where vacancies are increasing due to the popularity of telecommuting.
John Porowski, head of the residential real estate sector at real estate analytics firm Green Street, said the housing market in New York in particular is more resilient than the rest of the sector. Debt loans are still available, even if it costs more.
“People still need apartments. There is still a lot of demand,” said Pawlowski. “I know what will happen in the economy, but 2022 and 2023 should be very good years for New York City apartment landlords.”
According to analysts, housing is a necessity that people can’t easily give up, and 12-month rents allow for higher rents, so homeowners can survive higher interest rates than other landlords. It is suitable. Still, if inflation causes a recession and rising unemployment, renters will feel the impact, Paulowski said.
“People start returning with their parents, doubling with their roommates to save monthly rent and negotiating with the landlord to reduce rent increases,” he said.
Solow, who died in 2020 at the age of 92, founded the Solow Building Company over 50 years ago. His most famous building, known for its sloping façade, was the Midtown Office Tower on West 57th Street. Mr. Thoreau’s company was taken over by his son Stephen Soloviev, who founded the holding company Soloviev Group last year.
Black Spruce, a real estate investment company, was founded in 2009 and currently owns more than 4,000 apartments in the metropolitan area of New York City. Also founded in 2009, Orbach is a private real estate developer focused on affordable housing and a portfolio of over 6,000 apartments nationwide.
Black Spruce and Oberch worked together earlier this year to purchase a luxury condominium tower in Murray Hill, known as the American Copper Building, for more than $ 800 million.
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