"The lack of a supply pipeline makes a lot of investors comfortable with the market," he said.

Competition is heated even for older properties that require rehabilitation and upgrades. After Silverstone Property Group Inc. toured a 34-year old apartment building in the Kips Bay neighborhood, it took only three days to conduct due diligence, make an offer and sign a contract, said Martin Nussbaum, a managing member of the New York-based company.

Silverstone, through an affiliate, bought the 128-unit tower in February for about $53 million, or $414,063 a unit, according to Real Capital. It plans to gut-renovate the apartments as tenant leases expire, he said.

The cap rate at time of purchase was about 3.5 percent, according to Nussbaum.

"It's a safe bet, but for taking the safe bet you're arguably looking at lower returns," he said, adding that he expects rents to increase by 35 percent to 40 percent when the improvements are finished in the next 18 months.

Prices of high-end multifamily buildings are also being pushed higher as investors begin considering properties for condominium conversions, now or as an eventual exit strategy, according to Leibowitz.

Exit Strategy

Of the 12 buildings that sold for more than $100 million last year, two are slated to become condos. One of those conversion plans is by developer Harry Macklowe, who paid about $253 million, or $2.34 million per unit, to acquire 737 Park Ave., a property that had been owned by the same family for 65 years.

In a deal for a building that remained a rental, Leibowitz's group arranged the sale of the Corner on West 72nd Street to retirement account manager TIAA-CREF for $1.1 million per unit in May. The lowest rent for a one-bedroom unit at the luxury tower, which includes a rooftop terrace and children's playroom, was $4,475 in 2010 when the building first opened, according to Christopher Butt, a broker with Citi Habitats. Today, the cheapest one-bedroom commands $4,800, he said.

The competition to acquire apartments means it's harder to find Manhattan properties that are discounted because of financial distress, said David Schwartz, co-founder of Chicago- based Waterton Associates LLC. The company seeks "opportunistic situations" where a multifamily owner wants to reduce debt or has a loan coming due and can't refinance, he said.