NYC Market Update - Knakal

ROBERT A. KNAKAL

Chairman & Founding Partner

Massey Knakal Realty Services

BACKGROUND:

• Wharton School of Business - 1984

• Began Career 1984 – CB Richard Ellis

• Massey Knakal Established 1988

BROKERAGE:

• Over 1,175 Properties Sold

• $7.8 Billion Aggregate Market Value

• Two-Time Winner – Most Ingenious Deal of the Year

• REBNY Lifetime Achievement Award

NEW YORK CITY MULTI-FAMILY

SALES MARKET OVERVIEW

ROBERT A. KNAKAL

CITYWIDE DOLLAR VOLUME (AGGREGATE SALES PRICE)

2005 –2011, ALL SALES

*Annualized

Source: Massey Knakal Realty Services

$12.6

$25.2

Total

Market2005 2006 2007 2008 2009 2010 2011

Q1 $4,687,088,438 $9,011,375,517 $20,113,620,906 $6,225,691,306 $1,876,791,798 $2,868,750,994 $4,007,498,481

Q2 $9,559,877,112 $10,405,687,994 $15,740,867,793 $8,244,255,279 $1,028,217,272 $3,534,753,921 $8,681,260,927

Q3 $8,247,073,803 $8,273,171,091 $11,800,478,891 $8,142,997,826 $1,685,574,291 $2,691,203,147 $6,503,948,793

Q4 $10,109,336,284 $16,506,931,951 $14,537,251,297 $2,687,946,327 $1,500,606,697 $5,136,496,100

Total $32,603,375,638 $44,197,166,553 $62,192,218,888 $25,300,890,738 $6,091,190,058 $14,231,204,162 25,590,277,601*

CITYWIDE DOLLAR VOLUME (AGGREGATE SALES PRICE)

2005 –2011, ALL SALES (IN BILLIONS)


$32.6

$44.2

$62.2

$25.3

$6.1

$14.2

$0

$10

$20

$30

$40

$50

$60

$70

2005 2006 2007 2008 2009 2010 2011

$19.2

$25.6

NYC TOTAL SALE DOLLAR VOLUME

3rd QUARTER 2011


CITYWIDE TURNOVER (NUMBER OF PROPERTIES SOLD)

2005 –2011, ALL SALES

*Annualized


$25.2

Total Market 2005 2006 2007 2008 2009 2010 2011

Q1 964 1,320 1,353 951 289 443 495

Q2 1,154 1,284 1,385 938 413 428 505

Q3 1,259 1,149 1,242 680 353 377 548

Q4 1,066 1,122 1,038 575 355 442

Total 4,443 4,875 5,018 3,144 1,410 1,690 2,064*

NYC TOTAL BUILDINGS SOLD


4,443

4,875 5,018

3,144

1,4101,690

0

1,000

2,000

3,000

4,000

5,000

6,000

2005 2006 2007 2008 2009 2010 2011

1,548

2,064

% OF TOTAL STOCK SOLD


2.69%

2.96% 3.04%

1.91%

0.87%1.01%

1.16%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2005 2006 2007 2008 2009 2010 2011

AVG. PRICE PER PROPERTY SOLD (IN MILLIONS)


$7.3

$9.1

$12.4

$8.0

$4.4

$7.2

$12.4

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

2005 2006 2007 2008 2009 2010 2011

APARTMENT BUILDINGS WALK-UP and ELEVATOR SALES

# Buildings # Units $ Volume

2009 467 10,504 $1.34 B

2010 546 15,849 $2.63 B

1Q-3Q11 460 13,139 $3.46 B

CHANGE* +12% +11% +75%

*Annualized


(COMBINED)

APARTMENT BUILDINGS WALK-UP SALES

2009

2010


Manhattan 76 1,088 252,563,208$

Northern Manhattan 42 1,039 94,100,552$

Bronx 57 1,635 112,611,847$

Brooklyn 132 1,317 165,440,737$

Queens 65 453 73,075,375$

TOTAL MARKET 372 5,532 697,791,719$


Manhattan 74 983 290,715,439$


Bronx 65 1,464 98,038,423$

Brooklyn 65 877 195,924,468$

Queens 149 1,551 123,110,671$

TOTAL MARKET 415 6,102 827,040,276$


Manhattan 66 823 296,229,000$

Northern Manhattan 49 818 101,762,684$

Bronx 42 1,008 75,839,539$

Brooklyn 150 1,995 259,310,780$

Queens 49 642 87,310,391$

TOTAL MARKET 356 5,286 819,452,394$

1Q-3Q 2011

CHANGE* +14% 16% +32%

*Annualized

Source: Massey Knakal

Realty Services +

APARTMENT BUILDINGS ELEVATOR SALES

2009

2010

1Q-3Q 2011

*Annualized

Source: Massey Knakal

Realty Services


Manhattan 12 650 239,675,000$


Bronx 34 2,009 148,660,790$

Brooklyn 22 1,192 121,201,400$

Queens 5 506 54,792,500$

TOTAL MARKET 95 4,972 642,237,690$


Manhattan 24 2,459 1,069,409,181$


Bronx 41 3,031 229,261,142$

Brooklyn 18 783 105,152,500$

Queens 14 679 85,342,000$

TOTAL MARKET 131 9,747 1,804,740,842$


Manhattan 26 3,418 2,066,883,641$


Bronx 30 1,888 150,144,370$

Brooklyn 26 1,380 196,848,936$

Queens 12 932 180,803,247$

TOTAL MARKET 104 7,853 2,637,655,194$

CHANGE* +13% +7% 95%+

MULTIFAMILY ANALYSIS CAP RATES


WALK-UP

ELEVATOR

2007 2009 2010 2011 Change from

2010

Change from

2007

Manhattan 4.40% 5.46% 5.78% 5.20% -58 +80

Northern Manhattan 5.43% 7.02% 7.52% 6.54% -98 +111

Bronx 7.45% 7.51% 8.08% 8.39% +31 +94

Brooklyn 5.91% 7.60% 7.17% 7.05% -12 +114

Queens 6.45% 6.72% 7.45% 6.80% -65 +35

2007 2009 2010 2011 Change from

2010

Change from

2007

Manhattan 3.18% 4.71% 4.80% 4.50% -30 +132

Northern Manhattan 5.11% 5.53% 6.27% 5.88% -39 +77

Bronx 5.85% 7.84% 7.53% 7.25% -28 +140

Brooklyn 5.27% 6.14% 6.79% 6.03% -76 +76

Queens 5.32% 6.04% 6.08% 5.58% -50 +26

MULTIFAMILY ANALYSIS GRM


WALK-UP

ELEVATOR

2007 2009 2010 2011 Change from

2010

Change from

2007

Manhattan 15.35 11.66 11.83 11.89 +0.06 -3.46

Northern Manhattan 11.45 8.25 7.51 7.80 +0.29 -3.65

Bronx 7.81 7.16 6.59 6.42 -0.17 -1.39

Brooklyn 10.12 9.42 10.11 8.79 -1.32 -1.33

Queens 11.21 9.93 9.28 9.52 +0.24 -1.69

2007 2009 2010 2011 Change from

2010

Change from

2007

Manhattan 16.75 13.30 12.78 14.62 +1.84 -2.13

Northern Manhattan 12.54 8.47 8.75 8.41 -0.34 -4.13

Bronx 8.45 6.94 7.25 6.99 -0.26 -1.46

Brooklyn 10.96 8.78 8.63 10.55 +1.92 -0.41

Queens 12.13 9.14 9.66 10.65 +0.99 -1.48

MULTIFAMILY ANALYSIS PRICE PER SQUARE FOOT


WALK-UP

ELEVATOR

2007 2009 2010 2011 Change from

2010

Change from

2007

Manhattan $556 $505 $541 $592 +9% +6%

Northern Manhattan $307 $161 $163 $211 +29% -31%

Bronx $108 $88 $87 $97 +11% -10%

Brooklyn $188 $160 $194 $163 -16% -13%

Queens $220 $190 $202 $192 -5% -13%

2007 2009 2010 2011 Change from

2010

Change from

2007

Manhattan $522 $434 $440 $628 +43% +20%

Northern Manhattan $170 $124 $179 $166 -7% -2%

Bronx $85 $69 $71 $84 +18% -1%

Brooklyn $110 $126 $171 $145 -15% +32%

Queens $117 $133 $176 $193 +10% +65%

MULTIFAMILY ANALYSIS PRICE PER UNIT


WALK-UP

ELEVATOR

2009 2010 2011 Change from

2010

Manhattan $347,630 $373,315 $412,355 +10%

Northern Manhattan $115,780 $104,627 $142,268 +37%

Bronx $73,522 $73,578 $82,213 +12%

Brooklyn $131,574 $132,876 $129,061 -3%

Queens $143,450 $140,938 $142,519 +1%

2009 2010 2011 Change from

2010

Manhattan $355,181 $326,325 $583,265 +79%

Northern Manhattan $92,733 $127,910 $182,811 +43%

Bronx $70,643 $73,227 $84,343 +15%

Brooklyn $129,672 $140,564 $176,425 +26%

Queens $108,383 $133,986 $182,438 +37%

9.24%

6.27%

5.50%

3.80%

3.05%

3.65%

4.84%

12.02%

11.23%

11.74%

8.49%

7.50%

7.05%

10.02%

11.54%

9.27%

8.37%8.52%

8.96%

10.31%

11.52%

10.15%9.54%

8.75%

7.42%

7.75%

7.45%

7.03%

7.55% 7.58%

6.31%

3.90%

4.52% 4.50%

9.74%

12.34%

10.83%10.67%

10.13%

9.09%

8.71%9.25%

8.92%

8.53%8.22%

7.92%

7.19%

7.22%

5.00%

4.75%4.50%4.60%

4.40%

5.05%

5.78%

5.20%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

CAP RATES

Source: Massey Knakal Realty Services, Miller Cicero (2003-2008)

MANHATTAN APARTMENT BUILDINGS (1984-2011)

Major Tax

Code Change 91-92

Recession

01-02

Recession

Current

Recession

P

R

O

J

E

C

T

E

D

WALK-UP

ELEVATOR

WALK-UP CAP RATES

COMPARED TO GRM


MANHATTAN WALK-UP APARTMENT BUILDINGS (1984-2011)

6.02%

7.27%7.50%

6.89%

5.31%

4.73%

6.00%

9.58%

8.80%

10.15%

12.60%

13.80%

14.25%

15.35%

14.90%

13.04%

11.89%12.02%

11.23%

9.74%

10.83%

12.34%

11.74%

7.05%

5.05% 5.20%

9.32%

8.85%9.20%

6.95%

5.93%

4.52%

4.09%

3.57%

9.36%

11.87%

7.37%

8.71%

9.09%

10.67%

10.13% 9.25%

8.92%8.53%

8.22%

7.92%

5.00%4.75% 4.60% 4.40%

4.50%

7.50%

7.22%7.19%

8.49%

5.78%

2%

4%

6%

8%

10%

12%

14%

16%

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Major Tax

Code Change 91-92

Recession

01-02

Recession

Current

Recession

P

R

O

J

E

C

T

E

D

GRM

CAP RATE

8.54%

10.52%

12.06%

10.77%

11.34%

10.45%

7.31%

5.60%5.25%

6.21%

7.92%

9.05%

12.06%

10.75%

12.05%

13.83%

16.00%16.40%

13.71%

12.74%

11.52%

9.24%

10.02%

11.54%

10.15%

9.54%

8.75%

7.55%

6.27%

7.58%

6.31%

5.50%

3.80%

3.05%

3.65%4.11%4.38%

4.75%

6.70%

11.55%

17.10%16.75%

14.62%

8.52%

9.27%

8.96%

8.37%

7.42%

7.75%

7.45%

7.03%

4.52%4.84%

4.50%

3.90%

10.31%

2%

4%

6%

8%

10%

12%

14%

16%

18%

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

ELEVATOR CAP RATES

COMPARED TO GRM


Major Tax

Code Change

91-92

Recession

01-02

Recession

Current

Recession

P

R

O

J

E

C

T

E

D

GRM

CAP RATE

MANHATTAN ELEVATOR APARTMENT BUILDINGS (1984-2011)

9.24%

10.02%

6.27%

3.65%

11.23%

10.13%

11.74%

7.05%

3.90%3.80%

5.50%6.31%

7.58%7.55%

7.03%7.45%

7.75%

7.42%

8.75%

9.54%10.15%

11.54%

8.37%8.52%

9.27%8.96%

10.31%

11.52%

4.52% 4.50%

3.05%

5.05%

4.50%4.40%4.60%4.75%

5.00%

7.50%7.22%

7.19%

8.49%

7.92%8.22%

8.53%

8.92%

9.25%

12.34%

10.83%

9.74%

8.71%

9.09%

10.67%

12.02%

5.78%

5.20%

0%

2%

4%

6%

8%

10%

12%

14%

Mortgage Rate 13.5213.2110.93 9.27 10.5010.85 9.96 9.67 8.37 7.92 6.94 9.25 7.12 7.80 7.06 6.79 8.17 7.12 6.87 5.73 5.45 5.52 6.11 6.30 6.02 5.89 4.86 4.36

Elevator 11.5210.31 8.96 9.27 8.52 8.37 9.24 10.0211.5410.15 9.54 8.75 7.42 7.75 7.45 7.03 7.55 6.27 7.58 6.31 5.50 3.80 3.05 3.90 3.65 4.52 4.84 4.50

Walk-Up 12.0211.2310.1310.67 9.09 8.71 9.74 10.8312.3411.74 9.25 8.92 8.53 8.22 7.92 8.49 7.19 7.22 7.50 7.05 5.00 4.75 4.60 4.40 4.50 5.05 5.78 5.20

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

CAP RATES

COMPARED TO MORTGAGE RATES

Source: Massey Knakal Realty Services, Miller Cicero (2003-2008), Federal Reserve Bank


ELEVATOR

WALK-UP

P

R

O

J

E

C

T

E

D

LEVERAGE (CAP RATES MINUS MORTGAGE RATES)


2.60

%

0.24

%

0.71

%

1.40

%

1.16

%

3.97

%

3.82

%

1.41

%

0.42

%0.

86%

1.70

%

1.32

%

0.92

%

-2.0

0%

-2.9

0%

-1.9

7%

0.00

%

-1.9

8%

-2.4

8%

-0.7

2%

0.35

%

2.23

%

3.17

%

-0.6

2%

-0.8

5%

0.39

%

-0.0

5%

0.30

%

-0.5

0%

0.58

%

0.05

%

-0.0

2%

0.14

%

-1.3

7%

-2.4

0%

-2.3

7%

-1.7

2%

-3.0

6%

-1.5

0%

-1.9

8%

-0.8

0%

-1.4

1%

-2.1

4%

-0.2

2%

0.10

%

-0.9

8%

2.31

%

-0.3

3%

0.63

%

-0.4

5%

-0.8

4%

-1.9

0%-1

.51%

-0.7

7%

-1.5

2%

0.84

%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%


2.60

%

0.24

%0.

71%

1.40

%

1.16

%

3.97

%

3.82

%

1.41

%

0.42

%0.

86%

1.70

%

1.32

%

0.92

%

-3.0

6%

-1.7

2%

-2.3

7%

-2.4

0%

-1.3

7%-0

.95%

-0.0

2%0.05

%0.

58%

-0.5

0%

0.30

%

-0.0

5%

0.39

%

-0.8

5%-0.6

2%

3.17

%

2.23

%

0.35

%

-0.7

2%

-2.4

8%-1

.98%

0.00

%

-1.9

7%

-2.9

0%

-2.0

0%

0.27

%

-1.5

2%

-0.7

7%

-1.5

1%

-1.9

0%

-0.8

4%-0.4

5%

0.63

%

-0.3

3%

2.31

%

-0.9

8%

0.10

%

-0.2

2%

-2.1

4%

-1.4

1%

-0.8

0%

-1.9

8%-1

.50%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

YEAR

Elevator -2.00 -2.90 -1.97 0.00 -1.98 -2.48 -0.72 0.35 3.17 2.23 2.60 -0.50 0.30 -0.05 0.39 0.24 -0.62 -0.85 0.71 0.58 0.05 -1.72 -3.06 -2.40 -2.37 -1.37 -0.02 -0.95

Walk-Up -1.50 -1.98 -0.80 1.40 -1.41 -2.14 -0.22 1.16 3.97 3.82 2.31 -0.33 1.41 0.42 0.86 1.70 -0.98 0.10 0.63 1.32 -0.45 -0.77 -1.51 -1.90 -1.52 -0.84 0.92 0.27

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

MANHATTAN - Leverage (Cap Rates minus Mortgage Rates)POSITIVE LEVERAGE

NEGATIVE LEVERAGE

ELEVATOR

WALK-UP

P

R

O

J

E

C

T

E

D

CAP RATES

COMPARED TO 10-YEAR T-BILL

Source: Massey Knakal Realty Services, Miller Cicero (2003-2008), US Treasury


ELEVATOR

WALK-UP

P

R

O

J

E

C

T

E

D

9.24%

10.02%

7.45%

11.52%

10.31%

8.96%

9.27%

8.52% 8.37%

11.54%

10.15%9.54%

8.75%

7.42%7.75%

7.03%

7.55%

6.27%

7.58%

6.31% 5.50%

3.80%

3.05%

3.90%3.65%

4.52% 4.50%

12.02%

11.23%

10.13%

10.67%

9.09%8.71%

9.74%

10.83%

12.34%

11.74%

9.25%

8.92%

8.53%8.22%

7.92%

8.49%

7.19%

7.22%

7.50%

7.05%

5.00%

4.75%4.60%4.40% 4.50%

5.05%

5.78%

5.20%

0%

2%

4%

6%

8%

10%

12%

14%

10-Year T-Bill 11.86 11.70 9.04 7.18 8.83 9.23 8.02 8.25 6.79 6.75 5.66 7.88 5.67 6.51 5.38 4.84 6.50 4.96 5.06 4.15 4.09 4.28 4.38 4.66 3.79 3.56 3.22 2.46

Elevator 11.52 10.31 8.96 9.27 8.52 8.37 9.24 10.0211.54 10.15 9.54 8.75 7.42 7.75 7.45 7.03 7.55 6.27 7.58 6.31 5.50 3.80 3.05 3.90 3.65 4.52 4.84 4.50

Walk-Up 12.02 11.2310.13 10.67 9.09 8.71 9.74 10.8312.34 11.74 9.25 8.92 8.53 8.22 7.92 8.49 7.19 7.22 7.50 7.05 5.00 4.75 4.60 4.40 4.50 5.05 5.78 5.20

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

1.75

% 2.07

%2.

19%

1.72

%

2.58

%

5.55

%

4.99

%

2.86

%

1.71

%

2.54

%

3.65

%

2.90

%

0.47

%

2.56

% 2.74

%

-0.1

4%

-0.7

6%

-1.3

3%

-0.4

8%

1.41

%

2.16

%2.

52%

1.31

%

1.05

%

0.96

%

1.62

%

2.04

%

1.24

%

0.87

%

3.88

%

3.40

%

4.75

%

1.77

%

1.22

%

-0.8

6%

-0.3

1%-0.0

8%

-1.3

9%

-0.3

4%

2.09

%

-0.2

6%

0.22

%

0.91

%

2.44

%

2.26

%

0.69

%

0.71

%

1.49

%

1.04

%

3.59

%

-0.5

2%

0.26

%

-0.4

7%

1.09

%

0.16

%

3.49

%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

RISK PREMIUM (CAP RATES MINUS 10-YEAR T-BILL)



2.60

%

0.24

%0.

71%

1.40

%

1.16

%

3.97

%

3.82

%

1.41

%

0.42

%0.

86%

1.70

%

1.32

%

0.92

%

-3.0

6%

-1.7

2%

-2.3

7%

-2.4

0%

-1.3

7%-0

.95%

-0.0

2%0.05

%0.

58%

-0.5

0%

0.30

%

-0.0

5%

0.39

%

-0.8

5%-0.6

2%

3.17

%

2.23

%

0.35

%

-0.7

2%

-2.4

8%-1

.98%

0.00

%

-1.9

7%

-2.9

0%

-2.0

0%

0.27

%

-1.5

2%

-0.7

7%

-1.5

1%

-1.9

0%

-0.8

4%-0.4

5%

0.63

%

-0.3

3%

2.31

%

-0.9

8%

0.10

%

-0.2

2%

-2.1

4%

-1.4

1%

-0.8

0%

-1.9

8%-1

.50%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

YEAR

Elevator -2.00 -2.90 -1.97 0.00 -1.98 -2.48 -0.72 0.35 3.17 2.23 2.60 -0.50 0.30 -0.05 0.39 0.24 -0.62 -0.85 0.71 0.58 0.05 -1.72 -3.06 -2.40 -2.37 -1.37 -0.02 -0.95

Walk-Up -1.50 -1.98 -0.80 1.40 -1.41 -2.14 -0.22 1.16 3.97 3.82 2.31 -0.33 1.41 0.42 0.86 1.70 -0.98 0.10 0.63 1.32 -0.45 -0.77 -1.51 -1.90 -1.52 -0.84 0.92 0.27

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

MANHATTAN - Leverage (Cap Rates minus Mortgage Rates)

POSITIVE LEVERAGE

NEGATIVE LEVERAGE

ELEVATOR

WALK-UP

P

R

O

J

E

C

T

E

D

Why Are Values Rising?


1 Fundamentals Are Improving



2 Supply / Demand Imbalance




3 Interest Rates




3 Interest Rates

4 Financing is Available

10 THINGS TO KEEP AN EYE ON:

1. Unemployment

3. Banking

4. Global Implications

5. Supply vs. Demand

2012 and BEYOND

2. Corporate Profits

6. Housing Market

7. Inflation

8. Fed Monetary Policy

9. Deleveraging

10. Deficits, Debt, Pensions

ROBERT A. KNAKAL

Chairman & Founding Partner


[email protected]


275 Madison Avenue

New York, NY 10016

NYC Market Update - Knakal

Real Estate

Transcript of NYC Market Update - Knakal