Nyc Capital Markets: Sustained Recovery Phase Underway Despite Lingering Uncertainties
Investment demand in Q2 2026 continued to recover at a measured pace. Dollar volume reached $7.8 billion, the strongest second quarter since 2022. Although investor confidence remains restrained by the lack of clear outlook on interest rates and the broader economy, awaiting capital has begun to identify pockets of opportunity in the city, propelling the market into a sustained recovery phase: the first half of 2026 has now reached a total of $16.1 billion, 31.4% higher than the same period last year and the second-highest first half in the post-COVID era.
In Q2 2026, there were 550 transactions involving the sale of 658 properties—a 10.1% year-over-year (YOY) decrease in properties sold. Average pricing for core property types across New York City climbed to $522 per square foot (psf), a 2.9% increase from the 2025 average. Cap rates for core property types, which reached an all-time high in 2025, have leveled out and now stand at an average of 6.89%.
Sector Highlights
Office: Dollar volume in Q2 2026 reached $2.3 billion, 42.0% higher than Q2 2025. Institutional and REIT investors continue to lead the way, acquiring large, best-in-class assets on their way to claiming 56.1% of dollar volume for deals exceeding $25 million. In addition, small- to mid-sized private capital has entered the fray over the last several quarters, most often deploying value-add strategies for heavily discounted, underutilized assets. The $2.3 billion in volume was both a quarter-over-quarter (QOQ) and YOY increase, yet the average deal size fell to $57.9 million after fluctuating between $80 million and $110 million over the last three quarters. Contributing to that, the second quarter recorded 40 transactions, the most in a quarter since Q4 2018. Pricing rose nominally, up 1.2% to $505 psf in the first half of 2026.
Multifamily: Combined dollar volume for elevator and walk-up properties reached $1.8 billion, bringing the first-half 2026 total to $3.6 billion, the second-strongest half-year since the end of 2022. Fervent renter demand stacked against a limited supply pipeline has kept vacancy at historic lows and attracted a growing pool of investors. The uptick in sales has been spread across both individual luxury assets as well as large, multi-borough portfolio sales. The number of properties sold this year is on pace to post the second-highest total since 2018, and the share of portfolio deals has notched up to 14.6% of all transactions, eclipsing the long-term average of 13.5% for the first time in four years.
Development: Volume reached $1.7 billion in Q2 2026, the highest quarterly total since Q4 2021, as depressed land values and a still-limited supply pipeline spurred activity in the development sector. That momentum has been in place since the beginning of 2025: each of the last six quarters exceeded $1 billion in volume after previously not surpassing that threshold since Q1 2022, and each of the last two half-years (H2 2025, H1 2026) reached at least $1.8 billion after previously not reaching that mark since H2 2019. The most pronounced increases so far this year occurred in Brooklyn (up 84.3% YOY to $737 million) and Manhattan (up 37.6% YOY to $1.2 billion). The increased demand has also begun to translate into recovering pricing, as citywide price per buildable square foot climbed 10.5% YOY to $235, the highest average since 2018.
