More than any other neighborhood in Manhattan, the Upper West Side is attracting real estate investors at a breakneck pace, according to a new report by Eastern Consolidated. NY1's Real Estate reporter Jill Urban filed the following report.
There is little question that investors regard New York City as a safe place to put their money, but a new report by Barbara Byrne Denham, the chief economist of Eastern Consolidated, finds that one neighborhood in particular — the Upper West Side — is proving to be an investor magnet.
"The commercial property sales market in Manhattan has come back strongly in 2012, but the area where it came back the strongest was the Upper West Side," Denham says. "Sales volume for multifamily properties tripled in 2012 over 2011 and the rest of Manhattan only increased by 10 percent."
In her report, Denham examines commercial real estate investment activity, which are full, multi-family building investments. Her report finds the Upper West Side is far outpacing the more trendy neighborhoods, even though those areas may generate higher rents and more buzz.
"The trendier neighborhoods like TriBeCa and the West Village attract a lot of residents, especially young people, and it has a lot of nightlife, but investors really prefer stable markets where there is maybe less nightlife, like the Upper West Side. And it attracts a residential base that really prefers to stay in their residency," says Denham.
Many investors prefer multi-family building investments because the rents generate cash immediately and continuously. Denham says investors know the Upper West Side offers a steady residential base with a wide range of housing stock.
"You see the modern buildings like the buildings at Columbus Square that sold for $900,000 per unit and then you see these Beaux Arts style buildings like the Chatsworth that sold for a very similar price," says Denham. "You also see a lot of brownstone sales and pre-wars."
A lot of the pre-wars have rent-regulated tenants which are attractive to investors. Not only do they offer a stable tenant, but when that person moves out, the units can often be renovated and rented for three or four times the price.
The report finds that while a few major sales did help drive up the average prices last year, the overall number of transactions on the Upper West is still far greater and more stable than any other area.