The Bronx Real Estate Market Cut in Half

1420 Burke Ave, Bronx NY 10469

Through the first nine months of the year, The Bronx real estate market has seen the number of transactions and total principal value cut by more than half. The slowdown is consistent across asset classes, with few exceptions and plenty of reasons. Valuations have yet to reflect the historic downturn with the lower equilibrium of transactions closing near recent records. In this thinner market for New York City’s lowest valued borough, we have fine tuned our benchmarks with several adjustments in either direction.

Our valuation benchmarks result from a qualitative analysis of public and proprietary sale and lease data that excludes non-market transactions. We filter out anomalous trades to give you a true view of the market. Following is a review of Bronx sales and lease transactions through the third quarter, including updates to the BuyTheBronx.com valuation benchmarks.

Home Sweet Home

The story in the residential markets has become a common refrain. Inventory of homes has shrunk because of owners’ reluctance to give up low rate mortgages. Meanwhile, current mortgage rates approaching 8% have forced buyers to readjust their plans. The lower inventory has been a greater force. Only half as many single family and multifamily homes with up to 4 units sold, but at average prices per square foot about 4% higher than last year. We have left those benchmarks unchanged, while adjusting our price per unit on 2-4 unit Multifamily benchmarks higher for Bronze and Silver and lower for Gold classes. Low end strength has offset high end weakness in The Bronx residential market.

Single Family

Asset ClassPrice / SF
SF Bronze$275
SF Silver$375
SF Gold$600

2-4 Unit Multifamily

Asset ClassPrice / SFPrice / Unit
MF Bronze$250$300,000
MF Silver$300$325,000
MFGold$375$400,000

Commercial Apartments

No Bronx asset class has faced more tumult than commercial apartments. The 2019 rent control law is just beginning to bare its teeth now that various pandemic aid programs have run their course. Then, Local Law 97 delt a double blow to landlords struggling under exploding costs. As if that wasn’t enough, the rent guidelines board approved increases that fall far short of the higher costs. It is certainly not an easy time to provide workforce housing.

450 E 144 Street, Bronx NY 10454
18 elevator apartments with ground floor commercial at 450 East 144th Street in Mott Haven sold for $3.3 million on September 18, 2023

Assessing the market is complicated by a handful of anomalous HDFC deals with contingencies affecting valuations. Overlooking those still reveals a wide disparity of valuations reflecting differences in zoning and property conditions.

The deterioration has been clearer in the Elevator Apartment class where we dropped our price per unit benchmark to $150,000 while keeping the price per square foot unchanged. We hear a lot of complaints about elevator expenses, and they are showing up in the data.

Our Walk Up Apartments benchmarks face many of the same pressures, except elevators. Disparate valuations also appear in this category with some high prints in the summer and lower trades in September. We are reluctant to chase the averages lower while keeping aware that our benchmarks are above recent trades.

3331-3335 Hull Ave, Bronx NY 10467
24 Walk Up apartments at 3331-3335 Hull Ave near Williamsbridge Oval sold for $4.4 million on August 8, 2023

Buyer financing is the story of the commercial categories. With the Prime Rate currently at 8.5%, commercial mortgage rates have increased by around the same amount that transactions volumes have fallen. Higher costs and regulations are also taking away opportunities for efficiencies.

The Federal Reserve has been reducing the money supply for the past twenty months in their multi-year plan to combat inflation. In addition to pushing mortgage rates higher, this forces banks to reduce their loans outstanding. The era of free money is over, so only the best deals are getting done.

Commercial Apartments

Asset ClassPrice / SFPrice / Unit
Elevator Apartments$200$150,000
Walk Up Apartments$200$175,000

Other Commercial Sales

The industrial category has been one of the few bright spots in this historic real estate downturn. Vibrant consumer spending has supported the assets that serve those consumers. We have highlighted some exciting examples but even this vital sector has only seen half as many transactions this year at average prices per square foot about 7% lower. Our Industrial  benchmark was a little ahead of the average previously and we have cut it to $300/sf which is slightly below the 2023 average.

1177 Longwood Ave, Bronx NY 10474
6,550sf Hunts Point Industrial building at 1177 Longwood Ave sold for $2.4 million on September 27, 2023

Mixed use properties have also weathered the storm better than most. Apartment landlords are beginning to appreciate commercial tenants not subject to such draconian rent regulations. That category has seen only a third fewer transactions this year and at an average price per square foot almost 30% higher. We have maintained our Mixed Use benchmark, which was ahead of the average and is now behind. Zoning is a big driver of the higher valued trades and enough properties have closed below the benchmark to temper our enthusiasm.

49 Bruckner Blvd., Bronx NY 10454
5,120sf Mixed Use building at 49 Bruckner Blvd near the bustling corner of Alexander Ave sold for $1.7 million on July 25, 2023

The 23 retail properties that sold in The Bronx through September this year are less than half the 52 that sold in the first nine months of last year. The average price per square foot has fallen almost 10%, so we cut that benchmark to $400/sf. Location and zoning are the drivers of this category with recent trades settling at half or twice the benchmark.

The Office category continued to outperform with twelve properties selling so far this year, almost as many as the first three quarters of last year. Our $350/sf benchmark is unchanged and a little below recent averages. Metro-North’s Bronx expansion should support this nascent sector in coming years.

The Specialty sector is hard to pin down with so many different uses in the category. Auto repair is looking stronger, pre-K and charter schools are opening, while worship spaces have quieted down. Overlooking the skew from development deals to get a better picture of the sector leads us to reduce our benchmark to $350/sf.

There have been a third fewer Vacant Land sales this year at an average price per square foot almost 50% higher. We see fewer trades at the extremes and more falling within our benchmark range, which remains unchanged.

Asset ClassPrice / SF
Industrial$300
Mixed Use$300
Retail$400
Office$350
Specialty$350
Asset ClassLow P/SFHigh P/SF
Vacant Land$75$1,500

Bronx Lease Rates

The Fed is turning potential buyers into renters and steady macro economic growth is keeping inflation elevated. Those trends are supporting leasing rates across asset classes. We see fewer lease transactions this year than last year but not as bad as the decline in sales volume.

Our lease benchmarks are based on timely industry data. It is current and deep enough to construct benchmarks for Industrial, Retail and Office properties, with the last two categorized at Bronze, Silver and Gold levels.

Gross lease Benchmarks

Asset ClassPrice / SF
Retail Bronze$45
Retail Silver$50
Retail Gold$60
Office Bronze$35
Office Silver$40
Office Gold$45
Industrial$20

Healthy consumer spending has supported the Retail category. We raised our three Retail Lease benchmarks by $5/sf each. Seeing some compression in signed lease rates, Bronze and Silver remain slightly below recent averages while Gold is slightly above.

Office is a different story where we cut all three lease benchmarks by $5/sf each. Similar compression leaves the Bronze and Silver slightly below recent averages with Gold slightly above.

Industrial lease averages have come down slightly towards our $20/sf benchmark, which remains unchanged.

Fighting the Fed

Higher interest rates in recent weeks have pushed mortgage rates to the highest levels in over twenty years. Tighter lending standards are also making commercial deals more difficult to finance. While these trends have resulted in a thinner Bronx real estate market, weakening financial markets and persistent inflation are driving investment capital into real assets and supporting valuations near recent records. Valued at a fraction of other New York City boroughs, The Bronx real estate market performed better than most so far through this historic downturn.

No other source besides BuyTheBronx.com provides such timely and valuable market intelligence to guide brokers, operators and investors in The Bronx real estate market. Please use our comments section below to share your thoughts, or use our Contact function if you would like deeper information on the benchmarks.

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