This year saw a fundamental shift in the New York City investment sales market as the dominance of institutional buyers diminished, with private buyers such as family offices coming to greater prominence.
In an interview with Commercial Observer, RIPCO’s Vice Chairman of Investment Sales Stephen R. Preuss Sr. said that the shift played to their strengths, leading to a strong year in sales:
“We are generally a mid-market focused firm, and what we’ve seen is that institutions are playing more defense with their portfolios right now rather than going on the offense and acquiring new products. Lenders are also taking a very conservative approach on larger loan tickets, which handicaps higher-price-point focused purchasers. Additionally, many equity groups can’t pencil to their typical timeline horizons for returning capital to their investors due to the market turbulence. This really opened the door for our bread and butter, which is long-standing family offices and generational buyers who often focus on local acquisitions within their own sub-markets within the $1M-$50M range. This is the first time we’ve seen the private investor surpass the institutional investor as far as overall deployment of capital in our markets, so that’s quite substantial.”
At this time, RIPCO’s investment sales team is on track to surpass 60 transactions for 2023, totaling over $600 million in aggregate volume. While the number of larger ($100M+) transactions has diminished given current market conditions, RIPCO still saw more than their share of transactions over $50M. Preuss emphasizes that given RIPCO’s performance versus the market and the shift toward a buying class that plays right into the company’s strengths, RIPCO views 2023 as a successful year that is setting them up for a prosperous future in 2024 and beyond.
This sense of success and optimism permeates the firm. RIPCO Vice President Kevin Louie is focused on the resurgence of the hotel market from its prime COVID-era doldrums, noting that hotel occupancy in New York is at 90% of its pre-pandemic numbers and rising.
“Our team has sold two of the largest hotel conversions in NYC over the past twelve months, totaling more than 500 keys and exceeding $100 million in aggregate value,” – referring to two properties near LaGuardia Airport: 37-10 114th Street, a former Holiday Inn, and 90-10 Ditmars Blvd, a former Courtyard by Marriott.
On the multifamily side, the expiration of the 421a Affordable New York program, along with the June 2026 deadline for participating properties to receive their TCOs, has led to opportunity for RIPCO’s sales team. Vice President Andreas Efthymiou shared:
“Our team has seen a surge in demand for shovel-ready sites and in certain cases, low-density zoned land for bulk single-family home developments. We are currently involved in marketing over $250 million worth of these types of assets throughout Long Island City, Astoria, Mill Basin, and Fresh Meadows and several other similar markets.”
Given the multitude of current market challenges, Vice President Kevin Schmitz notes that the development character of some of the areas the company focuses on in Brooklyn and Queens has shifted:
“There’s a gap in developers who can execute in certain submarkets like Jamaica or East New York, areas that really need it. Non-profit affordable housing developers would often get outbid on price point. But now, other developers can’t execute in those areas due to the expiration of 421a, so non-profit developers have an interesting opportunity there since they have access to different types of funding sources, like from The Corporation for Supportive Housing.”
Despite continued challenges ahead for the industry in 2024, Preuss anticipates RIPCO prospering as they continue to adapt to market circumstances in ways that perfectly match their vast investment sales experience.
Read More: Commercial Observer: How RIPCO Real Estate Prospered as a Challenging Year Played to Its Strengths
