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Top Trends in the Manhattan Multifamily Market

We caught up with Peter Von Der Ahe, Senior VP of Investments at Marcus & Millichap, to get his insights on the market. Peter specializes in the Manhattan multifamily niche, and sees a number of trends changing the marketplace:

  • 2013 was a big year for transactions, with a lot of capital invested in the marketplace. 2014 will be one of the biggest years in terms of volume, as we have seen an increase in raised funds from a greater variety of sources. “Activity creates more activity,” as they say, and more money will continue to be raised. 
  • There are diverse sources of funding available from foreign investors, families and institutions from around the globe. It’s important to note that foreign investors have different objectives than domestic investors. Domestic investors desire capital return, while foreign investors may have additional investment objectives.
  • The multifamily market is the ideal sector to be working in because it has had consistent performance over the last few years. If the economy starts to decline, more investments will aggregate towards multifamily units.
  • There hasn’t been a dramatic increase in prices in comparison to the 2012 and 2013 levels. Interest rates are at all-time lows and prices are on the high side. Since there isn’t nearly enough supply of multifamily units in Manhattan, demand isn’t waning at all. 
  • Now is a great time to make moves in the market. For investors who are not selling or refinancing, now is a perfect opportunity to make a lateral move by trading to a better location or higher quality asset. Prices might be high, but there are significant investment opportunities.
  • 1031 Exchanges are very popular in the marketplace, as many new deals are being structured as 1031 transactions. However, there is the possibility that 1031 legislation will be removed at the end of the year. If this occurs, there will be a decreased number of asset sales as the deals become more expensive.
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