In the latest sign that ultraluxury apartment living is spreading far beyond New York and San Francisco, a glass-sheathed tower changed hands in Chicago last week in a deal that is shattering records.
The 60-story building, named OneEleven, was sold for $328.2 million, or $651,000 per unit, the highest price ever paid per unit for an apartment building of more than 50 units in Chicago. The 504-unit building, located in Chicago’s downtown Loop neighborhood, was sold by a unit of New York-based Related Cos. and was acquired by Heitman, a global real-estate investment-management firm based in Chicago.
The purchase price “is emblematic of the seemingly insatiable demand for high-quality, large real-estate assets in primary markets,” said Ben Thypin, director of market analysis for Real Capital Analytics, a commercial-real-estate data and analysis firm in New York.
The bidding for Atlanta-based Gables Residential and its $3 billion Class-A Sun Belt portfolio with management and development capabilities is headed to the wire, with final bids due this week, according to a recent report from Real Estate Alert.
The report also identified a group of finalists, including current owner New York-based Clarion Partners; Denver-based REIT Aimco; a joint venture between Charleston, S.C.-based Greystar and Newport Beach, Calif.-based Pimco; pension fund CalPERS and Boston-based GID Investments of Boston; and a team of DRA Advisors of New York and the Abu Dhabi Investment Authority.
“Most of the buyers are similar to the old Clarion joint venture—a real estate manager plus an institutional investor,” said Ben Thypin, director of market analysis at New York-based Real Capital Analytics.
Multifamily REITs have lots of money from eager Wall Street investors, but it’s hard to find good opportunities to buy properties in core markets. Apartment REITs have been net sellers overall in 2014, though by a very small margin.
“They are looking to optimize their portfolios,” says Ben Thypin, director of market analysis for Real Capital Analytics (RCA), based in New York City. “A common strategy has been to shed non-core and build their assets in core markets.”
Read More: http://nreionline.com/reits/reits-struggle-buy-apartments
For the second straight quarter, apartment sales showed robust growth as the transaction market continues to dust off a mediocre 2013. Apartment sales hit $27.5 billion in the third quarter, a 28 percent increase compared to the third quarter of 2013, according to a report from New York-based research firm Real Capital Analytics (RCA). The quarter’s performance was driven by a staggering $22 billion in sales of individual properties, one of the highest quarterly figures on record. Three of those trades occurred in New York.“In New York, there has been bunch of big trades of large older buildings that are undergoing condo conversion or at least renovation,” says Ben Thypin, director of market analysis at RCA.
In the third quarter, portfolio sales actually dipped almost $500 million compared to the third quarter of 2013.
“We’ve had so many portfolios sell over the past few years that it’s unlikely any of them are going to be resold during the next few years,” Thypin says. “There are only so many portfolios out there.”
Read More: http://www.multifamilyexecutive.com/business-finance/apartment-sales-jump-28-in-the-third-quarter_o
Cap rates hit historic lows in the third quarter—falling 40 basis points (bps) to 5.9 percent, according to New York-based Real Capital Analytics (RCA). The previous low over the past decade was 6.1 percent, which occurred in the fourth quarter of 2012.
The cap rate for mid- and high-rise properties in major metros fell to 3.6 percent, which was almost 20 bps below the rates seen during the condo conversion craze of the mid 2000’s. Garden property cap rates fell 40 bps to 6.1 percent. Overall, mid- and high-rise properties fell 25 bps to 5 percent.
Not surprisingly, the decline in cap rates was the result of larger economic forces.
“A 25 basis points dip in mortgage rates and the weight of capital were primarily responsible for the cap rate compression,” RCA said in the report.
These low cap rates have raised the fear of a bubble, but RCA thinks this cap rate climate differs from the one that industry faced in 2007.
“The spreads between rates and treasuries are still pretty wide and the outlook for NOI is pretty good right now,” says Ben Thypin, director of market analysis at RCA. “I think the market would prefer that base rates increase sooner rather than later so we can absorb it over time instead of in a few years from now when pricing is higher and the outlook for NOI growth is less certain.”
Read More: http://www.multifamilyexecutive.com/business-finance/cap-rates-hit-record-lows-in-3q_o
New York City has a new most expensive apartment for sale: $130 million. And it’s not even built yet.
The 12,394-square-foot triplex topping a new luxury tower at 520 Park Avenue would be the most expensive apartment price tag New York has ever seen, surpassing the $118.5 million asking price for three separate units currently being marketed together in Battery City’s Ritz-Carlton tower.
The 54-story condominium tower at 520 Park Avenue is scheduled to begin rising by February 2015, says Arthur Zeckendorf of Zeckendorf Development. Set on 60th Street two blocks east of Central Park, 520 Park Avenue is designed to rival another, wildly successful Zeckendorf project: 15 Central Park West, now a billionaire enclave and one of New York’s most prestigious addresses.
“Clearly 520 Park is the 15 Central Park West of the Upper East Side,” Arthur Zeckendorf told Forbes. “Both buildings were designed to be sister buildings.” He described the penthouse at 520 Park as having 15-foot ceilings, with old world finishes and modern amenities.
The luxury condos at 15 Central Park West sold out in four years to buyers including Goldman Sachs CEO Lloyd Blankfein, hedge fund billionaire Daniel Loeb, Spanx billionaire Sarah Blakely, the musician Sting, and actor Denzel Washington. The tower even inspired a book:House of Outrageous Fortune, by Michael Gross, which documented a supposed war for one of its penthouses between Loeb and activist investor Carl Icahn.
The Zeckendorfs are hoping for another home run, but there is a real question of how much more luxury the New York City market can take. Several other high-rise residential luxury developments are underway just south and east of Central Park, including Extell’s One57 tower at 57th Street, Harry Macklowe’s 432 Park Avenue, and the super-skinny 111 West 57th Street, which will be just 60 feet wide. The first of the super towers, One57 quickly sold half its apartments in 2012, but now stands at only about 70% sold, sources tell Forbes.
“My gut feeling is that there’s only so much demand for this type of product,” says Ben Thypin, director of market analysis at Real Capital Analytics. “One 57 is seeing trickling demand.”
Read More: http://www.forbes.com/sites/erincarlyle/2014/09/24/manhattans-new-most-expensive-listing-a-130-million-park-avenue-penthouse/
It’s been a common question as the apartment recovery matured: When will cap rates stop falling in the so-called “sexy six” markets of New York, Boston, Washington, Los Angeles, Northern California, and Seattle?
Well, if you guessed the first half of 2014, you were wrong.
In its “Apartment Mid-Year Review,” New York-based firm Real Capital Analytics (RCA) reported that cap rates fell to 4.4 percent in the second quarter, equaling the historic low established in the second half of 2006. For mid- and high-rise properties, yields came in at 3.9 percent after they blew past previous lows in 2013. So much for fears cap rates were getting too low in the gateway markets.
“There is so much capital pouring into those big six markets that even if many investors are concerned about valuations, there are plenty of investors still competing fiercely for those properties that the investors with concerns have passed on,” says Ben Thypin, director of market analysis at RCA.
Read More: http://www.multifamilyexecutive.com/dispositions-and-transactions/cap-rates-fall-to-historic-lows-as-investors-chase-yield-far-afield_o.aspx?dfpzone=home
The last time Douglaston Development built something big in
Brooklyn, New York, it was a 565-unit condo project across two towers in Williamsburg that debuted in 2008, when credit markets were freezing and mortgages were hard to get. Now, Douglaston is taking a different path, building a 510-unit luxury rental tower right next door.
“The velocity at which the economic cycle moves and the fear of interest rates moving up made it very prudent to do a rental,” Jeffrey Levine, chairman of Douglaston, said in an interview. “Greed is always tempered by fear.”
About 15,300 new rental units are under construction or planned in the next two years for Brooklyn, compared with just 1,700 planned condos, according to New York brokerage MNS. Developers see rentals as a safer bet in a market where rents are climbing faster than in Manhattan and neighborhoods such as Bushwick, Greenpoint and Crown Heights are gentrifying, drawing professionals seeking more space and tree-lined streets.
. . .
Investors eager to capitalize on Brooklyn’s popularity are also buying existing buildings, which offer opportunities to collect higher rents after renovations.
Purchases of multifamily properties in the borough totaled $1.17 billion in 2012, up 23 percent from the previous year and the most since 2006, according to research firm Real Capital Analytics Inc. Sales this year are on pace to match that, with about $897 million of buildings changing hands this year.
The average deal size is $10.1 million -- 24 percent larger than in 2012, according to Ben Carlos Thypin, director of market analysis for New York-based Real Capital.
Read More: http://www.bloomberg.com/news/2013-10-04/brooklyn-condo-boom-cooled-by-manhattan-like-rents.html
Berkadia Commercial Mortgage LLC, the joint venture of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) and Leucadia National Corp. (LUK), is looking beyond apartments as the U.S. government scales back in the market.
The commercial mortgage originator and servicer plans to expand its financing of offices, retail properties and hotels, said Hugh Frater, Berkadia’s chief executive officer. The bulk of the Horsham, Pennsylvania-based company’s business is currently tied to originating apartment loans backed by Fannie Mae, Freddie Mac and the Federal Housing Administration.
“Our intention is to diversify,” Frater, 57, said in an interview yesterday. “Diversify by property type, do a bit more in the other food groups, and then also diversify our lender mix.”
Berkadia, the third-largest U.S. commercial and multifamily mortgage servicer, is preparing for changes at government-backed Fannie Mae and Freddie Mac that may push up funding costs for apartment loans. It’s also seeking to profit from a rebound in offices, retail and other types of commercial properties in regions such as Texas and California, and is adding mortgage bankers and sales advisers in states including Florida and Georgia.
“A recovering commercial real estate market, which in turn means more transactions, is good news for them,” said Ben Carlos Thypin, director of market analysis at New York-based Real Capital Analytics Inc.
Read More: http://www.bloomberg.com/news/2013-05-02/berkadia-looks-beyond-apartments-as-u-s-retreating.html
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.