Inside The Surge: Why Free Market Multifamily Is Winning In NYC
Residential towers in Downtown Brooklyn - the area has seen a surge in new high rise residential ... More buildings in the past few years with more under construction. (Photo)
Free market buildings continued to dominate New York City's multifamily market in Q1 2025 with the sale of these assets accounting for 88% of the city's $2.21 billion in dollar volume, the highest share on record and up from 63% in 2024, Ariel Property Advisors' research shows.
Multifamily sales activity was largely concentrated in high-income neighborhoods in prime Brooklyn and Manhattan below 96th Street with a focus on buildings that had fewer than 25% rent-stabilized units or benefited from a 421a tax exemption.
Brooklyn led all submarkets in Q1 2025 with nearly half of New York City's total multifamily dollar volume. Year-over-year, the borough's dollar volume jumped 138% to $1.06 billion, and transactions rose 9% to 139. The majority (96%) of the dollar volume came from free market sales, and the borough saw four of the city's top five free market deals, all above $50 million.
The majority (96%) of the multifamily dollar volume in Brooklyn in Q1 2025 came from the sale of ... More free market buildings.
In one significant transaction, Steiner NYC bought back the 62% stake in 333 Schermerhorn Street in Downtown Brooklyn from JP Morgan for $259.5 million—$6.5 million more than its 2019 sale price—as part of a $420 million recapitalization. Another noteworthy sale was a 188-unit rental building at 395 Leonard Street in Williamsburg, acquired by Pacific Urban Investors for $127.5 million. Also, Michael and Edward Ostad of Flatiron Realty purchased the Pintchik Brooklyn Portfolio comprising 26 buildings along Flatbush Avenue and adjacent side streets in Prospect Heights and Park Slope for $102.5 million.
In Manhattan below 96th Street, multifamily sales totaled $868.51 million, a 36% year-over-year increase, across 45 transactions. Of the dollar volume, 92% of the sales were for predominantly free market buildings.
Of the multifamily dollar volume in Manhattan in Q1 2025, 92% of the sales were for predominantly ... More free market buildings.
Notably, Ares Management acquired a 75% interest from Mitsui Fudosan America in select tax lots within 525 W 52nd Street for $202.2 million. The transaction encompasses the market-rate condominium portion of the property, which includes 313 residential units benefiting from a 421a tax exemption, and a 1,678-square-foot retail space. The deal implies a total valuation of approximately $270 million for the assets. Additionally, A&E Real Estate acquired a 22-story, 179-unit apartment building at 501 East 87th Street for $116.5 million.
View over Yorkville and Upper East Side, Manhattan. A&E Real Estate acquired a 22-story, ... More 179-unit apartment building at 501 East 87th Street for $116.5 million.
The first quarter transactions in Brooklyn and Manhattan signal robust investor confidence in free market multifamily, driven by the appeal of assets with minimal regulatory constraints and the city's persistent housing shortage.
The major transactions indicate several key trends:
Jason Hart, Managing Director, The Carlyle Group, summed up his firm's interest in the residential rental market in a 2024 article in PERE, "We're leaning into multifamily now because the fundamentals are strong and the dislocation is creating real opportunity. Pricing is adjusting, but demand isn't going anywhere." Carlyle has aggressively purchased both small and large multifamily properties in New York City in recent years.
The recent transactions demonstrate strong investor demand, which is closely linked to the distinctive attributes of New York City's free market multifamily sector. Free market multifamily buildings have minimal to no rent restrictions and attract a diverse range of investors including institutions, private clients, and international capital. This heightened interest stems from several key factors:
The free market multifamily landscape in New York City comprises three primary categories:
Institutional investor The Carlyle Group has acquired a large portfolio of free market walk-up ... More buildings in Brooklyn.
Q1 2025 investment sales figures highlight the significant role of the free-market segment in the multifamily market in Manhattan below 96th Street and Brooklyn, demonstrating the continued confidence investors have in this asset class in prime locations.
To review Ariel Property Advisors' full Q1 2025 Multifamily Quarter in Review New York report, which includes data on all submarkets, please click here.
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