Manhattan Investment Sales Dip but Remain Ahead of 2025: Report – Commercial Observer
Investment sales volume in Manhattan fell 27 percent over the third quarter of 2026, totaling $2.5 billion, yet the second straight quarterly decline coincided with continued, if slowing, annual momentum.
“We’ll have our record year this year, even through all of this,” Brandon Polakoff, a principal and head of New York City investment sales at Avison Young, told Commercial Observer. “There are good opportunities, and there is capital out there for the right opportunities.”
The full-year pace of sales volume remained above 2025 measures, according to Avison Young’s most recent investment sales report, but below its 10-year average, as smaller deal sizes weighed on totals. Deal count, however, saw a 22 percent annual uptick over the first three quarters of the year, reaching 273 sales.
Manhattan’s underlying strength has kept deals moving, Polakoff said, and the gains are even stronger citywide. Across New York City, sales volume rose 13 percent across the first three quarters of 2026, reaching $16.2 billion.
Market headwinds have persisted through the year. Higher interest rates, geopolitical uncertainty and rising Treasury yields remain a source of hesitation for investors. Manhattan’s buyer pool has also shifted. Private buyers have the lead, and real estate investment trusts’ (REITs) share of dollar volume grew from 7.3 percent in 2025 to 36 percent so far this year, according to Avison Young. International and foreign buyers, on the other hand, continued to pull back.
Beyond the quarterly fluctuations, however, Manhattan is on track to rack up more than 360 transactions this year.
Multifamily’s momentum stood out among Manhattan’s asset classes, with year-to-date dollar volume up 74 percent and average prices per square foot up 34 percent from last year. Office assets continue to anchor Manhattan’s investment sales market, accounting for nearly half of the quarter’s dollar volume despite a 23 percent decline from the spring.
“I was just hired to sell another building in West Chelsea, and, when I looked at it a year ago, it was almost entirely vacant,” Polakoff said. “Now it’s entirely full, with very high rents and headquarters. A year ago, that didn’t happen. So those fundamentals have given investors a lot more confidence.”
Record low retail vacancies fueled the largest quarterly dollar volume increase among the asset classes, up 54 percent over the prior quarter, though still down from last year’s pace. The sector has been helped along by an ongoing trend of large owner-user purchases. Conversion sales, too, rose by 27 percent over the quarter.
Development, in contrast, has slowed, with year-to-date dollar volume down 17 percent from the first three quarters of 2025 and down 54 percent over the quarter. Average development prices per square foot have declined by nearly half from 2025 levels.
Polakoff said there is still a significant appetite for rental development outside of Manhattan, thanks to the high rents and low vacancies.
“I don’t think this is going to be a trend that sustains,” Polakoff said. “I think it happens to be an off quarter, but not an off asset class.”
The lagging nature of real estate deal-making makes quarterly conclusions difficult, Polakoff said, but 2026 looks strong overall. Higher capitalization rates have gone hand in hand with higher net operating incomes, softening pressure on property values.
Emily Davis can be reached at edavis@commercialobserver.com.
