The RPG Office Condominium Report
Market Overview
The Manhattan office condominium market comprises 99 buildings totaling approximately 10.9 million square feet. Midtown accounts for 6 million sqft, Midtown South 2.8 million sqft, and Downtown 2.1 million sqft. By class, Class A represents 3.4 million sqft, Class B 5.4 million sqft, and Class C 2.1 million sqft.
In H1 2017, 118,041 square feet traded across 25 sales in 17 buildings for a total of $103,322,871, at a record-high average price of $875 per square foot and an average unit size of 4,722 sqft. Square footage declined 67% compared to the H2 2016 record of 359,082 sqft and was lower than the 5-year average of 224,414 sqft. Dollar value of $103,322,871 was 66% less than the H2 2016 record of $304,040,259 and below the 5-year average of $154,237,131. The record average price of $875/sqft was 3% higher than $847 in H2 2016 and significantly above the 5-year average of $687. The 25 sales were nearly half the 46 in H2 2016 and 11 fewer than the 5-year average.
By submarket: Midtown recorded 15 sales totaling 78,848 sqft for $67,872,303 at $892/sqft average. Midtown South had 3 sales totaling 22,078 sqft for $18,585,000 at $842/sqft. Downtown had 7 sales totaling 17,115 sqft for $16,865,568 at $985/sqft.
In the first half of 2017, there were 452,528 square feet of office condominium sales in Manhattan totaling $320,822,871. There were 26 office condominium sales, averaging 17,405 square feet per sale, at an average of $709 per square foot.
Market Overview (continued)
Square Footage of Sales: The 452,528 square feet sold in the first half of 2017 is 24% higher than the 364,406 square feet sold in the second half of 2016 and 70% higher than the five-year average of 266,276 square feet sold. Out of the 26 sales, the smallest sale was 571 square feet and the largest sale was 334,415 square feet.
Dollar Value of Sales: In the first half of 2017, office condominium sales totaled $320,822,871 which is 4% more than the $309,865,488 in sales for the second half of 2016. The dollar value of sales is 78% more than the five-year average of $180,213,240.
Average Price Per Square Foot: In the first half of 2017, the average price per square foot was $709. This is 17% lower than the second half of 2016 average of $850 per square foot and 5% higher than the five-year average of $677 per square foot.
Number of Sales: There were 26 sales in the first half of 2017, down 23 sales from the second half of 2016. The number of office condominiums sold in the first half of 2017 was 12 less than the five-year average of 38 sales.
Submarket Statistics
The Midtown submarket: In the first half of 2017, there were 15 sales totaling 411,655 square feet. The dollar value of these sales totaled $283,702,303, averaging $689 per square foot.
The Midtown South submarket: In the first half of 2017, there were 4 sales totaling 23,758 square feet. The dollar value of these sales totaled $20,255,000, averaging $853 per square foot.
The Downtown submarket: In the first half of 2017, there were 7 sales totaling 17,115 square feet. The dollar value of these sales totaled $16,865,568, averaging $985 per square foot.
Notable Office Condominium Sales
Townhouses vs. Office Condominiums
By Rudder Property Group
For office occupiers considering ownership in Manhattan, both townhouses and office condominiums present viable options, each with distinct advantages and drawbacks.
A survey of the market found 20 Midtown townhouses listed on Streeteasy totaling 116,119 sqft with a combined asking price of $268 million ($2,312/sqft average). By comparison, 66 Midtown office condominiums totaled 455,797 sqft with a combined asking price of $492 million ($1,080/sqft average).
Townhouse advantages include full building control, a separate entrance, signage opportunities, and residential conversion potential. However, townhouses come with significant disadvantages: inefficient floor plates, management-intensive operations, high carrying costs, considerably higher purchase prices, and limited growth potential.
Office condominium advantages include professional building services and staff, management-free ownership, lower operating expenses, expansion potential within the building, and an attended lobby with better security. The drawbacks include board approval requirements, shared common elements, no residential conversion potential, and building restrictions.
For most office occupiers, the office condominium offers a more practical and cost-effective ownership solution, at roughly half the per-square-foot cost of a comparable townhouse.
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.
©2017 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.
