Commercial property investment volume in Manhattan fell by 27 per cent to 2.5 billion dollars in the third quarter of 2026. Despite the second consecutive quarterly decline, the current year continues to run ahead of 2025 levels, although the pace remains below average by ten-year historical standards.
Brandon Polakoff, Principal and Head of New York City Investment Sales at Avison Young, emphasised that, despite these headwinds, the market was heading towards a record year. He noted viable market opportunities and sufficient liquidity for suitable investment assets. While smaller transaction sizes weighed on overall volume, the number of deals completed in the first three quarters rose by 22 per cent year-on-year to 273 sales.
Growing deal numbers and shifting buyer profile
In the third quarter, 87 sales were recorded in Manhattan, representing a slight decline on the previous quarter. Since the start of the year, volume has reached 9.61 billion dollars, sitting 4 per cent above the corresponding period in 2025. Growth was even more marked across New York City as a whole, where transaction volume climbed by 13 per cent to 16.2 billion dollars during the first nine months.
Prevailing interest rates, geopolitical uncertainties and rising US Treasury yields continue to weigh on the market. At the same time, the composition of buyers shifted noticeably: while international investors remained hesitant, private buyers dominated the market. The share of Real Estate Investment Trusts (REITs) by dollar volume rose from 7.3 per cent in the previous year to 36 per cent this year. Overall, Manhattan is on course for more than 360 transactions in 2026.
Performance across individual asset classes
Multi-family residential properties recorded particularly dynamic momentum, with transaction volume up 74 per cent year-to-date and square-metre prices rising by 34 per cent. Despite a 23 per cent drop compared to the spring, office properties accounted for almost half of the quarterly volume. Polakoff pointed to a visible brightening in the leasing markets: properties in locations such as West Chelsea, which were almost vacant a year ago, are now fully let and commanding high rents.
- —Retail properties recorded a quarterly transaction volume increase of 54 per cent, supported by historically low vacancy rates and acquisitions by owner-occupiers.
- —Sales aimed at converting existing buildings rose by 27 per cent quarter-on-quarter.
- —Development projects slowed significantly, with quarterly volume falling by 54 per cent while square-metre prices fell by nearly half compared to 2025.
Polakoff regarded the drop in development projects as a temporary dip, particularly given that demand for rental housing developments outside Manhattan remains strong. Although the lag in completing property transactions complicates short-term quarterly assessments, 2026 as a whole presents a stable picture. Higher capitalisation rates were being balanced by increased net operating income, noticeably cushioning pressure on capital values.
