The RPG Office Condominium Report
First Half 2015 Office Condominium Sales
- Pricing Soars: In the first half of 2015 the average price per square foot of $862 was up over 50% compared to the previous half year. Pricing was $290 per square foot higher than the five year average of $575 per square foot.
- Supply Constrained: There is 738,371 square feet of available Manhattan office condominiums, a 7% availability rate. If the units at the newly converted 866 United Nations Plaza and the International Gem Tower at 50 West 47th Street were extracted from the statistics, there would only be 171,762 square feet of available office condominiums for sale; a mere 1.6% availability rate.
- Office Condominium Sales Prices Compared to Lease Rates: In collaboration with CompStak, we compared five office condominium sales from the first half of 2015 to comparable office leases. Using this information we determined the "Office Condominium Pricing Ratio", an estimated spread between office condominium sales prices and lease rates.
Market Overview
There are 93 office condominium buildings in Manhattan, totaling 10.5 million square feet. The Midtown submarket is comprised of 5.7 million square feet. Midtown South is comprised of 2.8 million square feet. Downtown is comprised of 2 million square feet. There are 3.8 million square feet of class A office condominiums, 4.4 million square feet of class B, and 2.3 million square feet of class C.
First Half of 2015 Office Condominium Sales: In the first half of 2015 there were a total of 252,017 square feet of office condominium sales in Manhattan, totaling $217,248,738. The sales averaged $862 per square foot. There were a total of 39 office condominium units sold in 27 different buildings, averaging 6,462 square feet per sale.
In the first half of 2015 the total square footage of sales decreased compared to the second half of 2014. 252,017 square feet was sold, compared to 346,388 square feet in the second half of 2014. The total square footage of sales in the first half of 2015 is slightly higher than the five year average of 236,972 square feet.
In the first half of 2015 there was a total of $217,248,738 in sales, higher than the second half of 2014 sales which totaled $199,610,042. The average dollar value of sales per half year over the past five years totaled $136,979,802.
In the first half of 2015 the average price per square foot was $862, significantly higher than the $567 average price per square foot in the second half of 2014. Pricing was $290 per square foot higher than the five year average of $575 per square foot.
There were 39 sales in the first half of 2015, 14 sales more than the second half of the 2014. The number of office condominiums sold in the first half of 2015 was only one fewer than the five year average.
The Midtown submarket is Manhattan's largest office condominium submarket, comprised of 5.7 million square feet. In the first half of 2015 there were 14 sales totaling 105,602 square feet. The dollar value of these sales totaled $81,742,943, averaging $774 per square foot.
The Midtown South submarket is comprised of approximately 2.8 million square feet of office condominiums. In the first half of 2015 there were 9 sales totaling 63,685 square feet. The dollar value of these sales totaled $49,992,000 averaging $785 per square foot.
The Downtown submarket is comprised of approximately 2 million square feet of office condominiums. In the first half of 2015 there were 16 sales totaling 82,730 square feet. The dollar value of these sales totaled $85,513,795, averaging $1,034 per square foot.
There is 738,371 square feet of available Manhattan office condominiums, a 7% availability rate. There are units for sale in 24 buildings, with an average asking price of $1,132 per square foot. In the Midtown submarket there is 650,985 square feet for sale, with an average asking price of $1,145 per square foot. In the Midtown South submarket there is 54,815 square feet for sale, with an average asking price of $1,103 per square foot. In the Downtown submarket there is 32,571 square feet for sale, with an average asking price of $934 per square foot.
The newly converted 866 United Nations Plaza and the International Gem Tower at 50 West 47th Street make up 87% of the available square footage in the Midtown submarket. If the available square footage from the two buildings were extracted from the statistics, the citywide office condominium availability would only be 171,762 square feet; a mere 1.6% availability rate.
In the first half of 2015, there were 272,624 square feet of office condominium sales in Manhattan totaling $223,576,088. There were 42 office condominium sales, averaging 6,491 square feet per sale, at an average of $820 per square foot.
Market Overview (continued)
Square Footage of Sales: The 272,624 square feet sold in the first half of 2015 is 26% lower than the 368,470 square feet sold in the second half of 2014 and 11% higher than the five-year average of 245,595 square feet sold. Out of the 42 sales, the smallest sale was 420 square feet and the largest sale was 34,722 square feet.
Dollar Value of Sales: In the first half of 2015, office condominium sales totaled $223,576,088 which is 3% more than the $216,434,886 in sales for the second half of 2014. The dollar value of sales is 57% more than the five-year average of $141,955,129.
Average Price Per Square Foot: In the first half of 2015, the average price per square foot was $820. This is 40% higher than the second half of 2014 average of $587 per square foot and 42% higher than the five-year average of $578 per square foot.
Number of Sales: There were 42 sales in the first half of 2015, up 12 sales from the second half of 2014.
Submarket Statistics
The Midtown submarket: In the first half of 2015, there were 12 sales totaling 102,464 square feet. The dollar value of these sales totaled $71,322,093, averaging $696 per square foot.
The Midtown South submarket: In the first half of 2015, there were 11 sales totaling 107,031 square feet. The dollar value of these sales totaled $103,961,400, averaging $971 per square foot.
The Downtown submarket: In the first half of 2015, there were 15 sales totaling 48,252 square feet. The dollar value of these sales totaled $38,772,595, averaging $804 per square foot.
Office Condominium Sales Prices Compared to Lease Rates
By Rudder Property Group
In collaboration with CompStak, a real estate data firm, we compared five office condominium sales from the first half of 2015 to comparable office leases in comparable buildings. Using this information we determined an estimated spread between office condominium sales prices to lease rates. We refer to the estimated spread between office condominium sales prices and lease rates as the "Office Condo Pricing Ratio" or OCPR. OCPR is determined by dividing the office condominium sales price per square foot by the lease rate.
Office Condominium Pricing Ratio (OCPR) = Office Condo Sales Price / Sq Ft ÷ Lease Rate
Comparisons
131 West 33rd Street — Sale to PDK Worldwide (3/10/15, 7,291 Sq. Ft., $791/Sq. Ft.) vs. 7 Penn Plaza — Lease to Retail Wholesale & Department Store Union/RWDSU (Q1 2015, 30,500 Sq. Ft., Starting Rent: High $40's/Sq. Ft.) = OCPR 16.65
15 West 34th Street — Sale to Enchante Accessories (5/21/15, 7,283 Sq. Ft., $652/Sq. Ft.) vs. 1 West 34th Street — Lease to LM Cohen & Company CPA (Q2 2015, 5,792 Sq. Ft., Starting Rent: High $40's/Sq. Ft.) = OCPR 13.73
39 West 29th Street — Sale to Pacific Television Center (3/25/15, 5,068 Sq. Ft., $971/Sq. Ft.) vs. 44 West 28th Street — Lease to Yellowhammer Media Group (Q2 2015, 12,083 Sq. Ft., Starting Rent: High $40's/Sq. Ft.) = OCPR 20.44
70 West 36th Street — Sale to Shalbaf Brothers (1/26/15, 4,448 Sq. Ft., $776/Sq. Ft.) vs. 65 West 36th Street — Lease to Delivery Agent (Q3 2014, 2,050 Sq. Ft., Starting Rent: High $40's/Sq. Ft.) = OCPR 16.34
25 East 21st Street — Sale to Daphne Foundation (5/5/15, 4,400 Sq. Ft., $1,091/Sq. Ft.) vs. 920 Broadway — Lease to OpenTable (Q2 2014, 6,500 Sq. Ft., Starting Rent: High $60's/Sq. Ft.) = OCPR 16.16
Average Office Condominium Pricing Ratio (OCPR) = 16.44
All lease information was provided by CompStak.com. CompStak Exchange is a free platform for CRE brokers, appraisers and researchers to exchange verified commercial lease comps anonymously.
Research by CompStak and Rudder Property Group
Rudder Property Group
Rudder Property Group is a commercial real estate services firm that specializes exclusively in the sale of office condominiums in the New York metropolitan area. With 20 years of experience in this niche market, Rudder Property Group has sold over two million square feet of office condominiums with a dollar value in excess of $1 billion. In the small, highly specialized field of office condominium sales, Rudder Property Group is the market leader.
©2015 Rudder Property Group. All rights reserved. All material presented herein is intended for informational purposes only. While this information is believed to be accurate, it is represented subject to errors, omissions, changes or withdrawal without notice. All square footages are approximate and based on rentable square footages with standard Manhattan loss factors. For the purposes of this report, the definition of an office condominium is a building with more than two unit owners that has been constructed or converted to a condominium or cooperative for commercial use only. This report only includes properties in Manhattan below 96th Street.
