The RPG Office Condominium Report
Second Half 2020 Office Condominium Sales
- Buyers Re-emerge: In the first half of 2020, office condominium sales slowed down with the onset of COVID-19. The first half of 2020 closed with $81 million in office condominium sales. The slowdown didn't last for long, as buyers regained confidence and re-emerged in the market in the second half of 2020. There were more than $140 million in office condominium sales in the second half of 2020, which marks a 73% increase in dollar volume over the first half of the year.
- Larger Sales: Despite fewer office condominium sales in the second half of 2020, the units sold were much larger. The 13 sales in the second half of 2020 averaged 15,000 square feet, which is more than double the size of the average office condominium sold in the first half of 2020. Additionally, this is 80% higher than the five-year running average.
- Uncovering the Real Impact of COVID-19: The average office condominium sales price decreased 12.6% in the second half of 2020 when compared to the first half of the year. However, we expect the real impact on office condominium pricing is far greater. When analyzing the sales of office condominiums in three different buildings, both pre-COVID-19 and during COVID-19, we found the pandemic has caused a 32% decrease in values in the three buildings. This is likely a far better indicator of the pandemic's real impact on the values of office condominiums.
Market Overview
The Manhattan office condominium market is made up of 103 buildings, occupying a total of 11.2 million square feet. The Midtown submarket is comprised of 6.1 million square feet; Midtown South is comprised of 3 million square feet; and Downtown is comprised of 2.1 million square feet. There are 3.4 million square feet of Class A office condominiums, 5.5 million square feet of Class B, and 2.3 million square feet of Class C.
In the second half of 2020, there were 194,255 square feet of office condominium sales in Manhattan totaling $140,185,087. This included 13 office condominium sales (averaging 14,943 square feet) in 12 different buildings at an average of $722 per square foot.
The 194,255 square feet sold in the second half is more than double the 97,969 square feet sold in the first half of 2020. The total square footage of sales in the second half of 2020 is in line with the five-year average of 180,862 square feet sold per half-year.
In the second half of 2020, office condominium sales totaled $140,185,087, which is significantly higher than the $80,937,095 in sales for the first half of 2020. The dollar value of sales is only 9% less than the five-year average of $153,995,998.
In the second half of 2020, $722 was the average price per square foot. This is 12.65% lower than the first half of 2020 average of $826 per square foot and 15.24% lower than the five-year average of $851 per square foot.
There were 13 sales in the second half of 2020 compared to 17 sales in the first half of 2020. The number of office condominiums sold in the second half of 2020 was lower than the five-year average by 10 sales.
The Midtown submarket is Manhattan's largest office condominium submarket, comprised of approximately 6.1 million square feet. In the second half of 2020, there were six sales totaling 137,590 square feet. The dollar value of these sales totaled $87,273,417, averaging $634 per square foot.
The Midtown South submarket is comprised of approximately 3 million square feet of office condominiums. In the second half of 2020, there were six sales totaling 20,115 square feet. The dollar value of these sales was $17,092,670, averaging $850 per square foot.
The Downtown submarket is comprised of approximately 2.1 million square feet of office condominiums. In the second half of 2020, there was one sale totaling 36,550 square feet. The dollar value of the sale was $35,819,000 and averaged $980 per square foot.
In the second half of 2020, there were 119,473 square feet of office condominium sales in Manhattan totaling $82,190,397. There were 12 office condominium sales, averaging 9,956 square feet per sale, at an average of $688 per square foot.
Market Overview (continued)
Square Footage of Sales: The 119,473 square feet sold in the second half of 2020 is 1% higher than the 118,374 square feet sold in the first half of 2020 and 43% lower than the five-year average of 208,207 square feet sold. Out of the 13 sales, the smallest sale was 1,279 square feet and the largest sale was 55,941 square feet.
Dollar Value of Sales: In the second half of 2020, office condominium sales totaled $82,190,397 which is 4% less than the $85,675,764 in sales for the first half of 2020. The dollar value of sales is 52% less than the five-year average of $172,095,621.
Average Price Per Square Foot: In the second half of 2020, the average price per square foot was $688. This is 5% lower than the first half of 2020 average of $724 per square foot and 17% lower than the five-year average of $827 per square foot.
Number of Sales: There were 12 sales in the second half of 2020, down 5 sales from the first half of 2020. The number of office condominiums sold in the second half of 2020 was 12 less than the five-year average of 24 sales.
Submarket Statistics
The Midtown submarket: In the second half of 2020, there were 8 sales totaling 90,559 square feet. The dollar value of these sales totaled $59,257,092, averaging $654 per square foot.
The Midtown South submarket: In the second half of 2020, there were 3 sales totaling 68,917 square feet. The dollar value of these sales totaled $46,055,884, averaging $668 per square foot.
The Downtown submarket: In the second half of 2020, there were 2 sales totaling 3,903 square feet. The dollar value of these sales totaled $3,397,670, averaging $871 per square foot.
Notable Office Condominium Sales
COVID-19's Impact on Office Condominiums
By Rudder Property Group
The average price of office condominiums sold in the second half of 2020 was 18.5% lower than those sold in the second half of 2019. However, this does not fully reflect the pandemic's real impact on the value of office condominiums. One example to help illustrate this is a sale within 375 Pearl Street. A 36,550-square-foot unit on the 31st floor of the building closed in September 2020 but was negotiated in June 2018. Thus, its $980 per square foot sale price is not reflective of pandemic pricing and skews the cost per square foot for units sold in the second half of 2020.
To dig into this further, and to better understand the pandemic's true impact on the value of office condominiums, we compared 2020 sale prices against pre-COVID-19 sales prices at three different office condominium buildings. There were 20 pre-COVID-19 sales, which averaged $909 per square foot. During COVID-19, there have been six sales, which averaged $616 per square foot. This shows COVID-19 has caused a 32% decrease in office condominium values in these three buildings.
Building Comparison
20 West 33rd Street: Pre-COVID: 6 Sales at $875/Sq.Ft. | COVID: 1 Sale at $630/Sq.Ft. | -33% reduction
633 Third Avenue: Pre-COVID: 6 Sales at $907/Sq.Ft. | COVID: 2 Sales at $630/Sq.Ft. | -28% reduction
50 West 47th Street: Pre-COVID: 8 Sales at $1,028/Sq.Ft. | COVID: 3 Sales at $608/Sq.Ft. | -41% reduction
Total: Pre-COVID: 20 Sales at $909/Sq.Ft. | COVID: 6 Sales at $616/Sq.Ft. | -32% reduction
The pandemic has brought office condominium pricing to the lowest levels we've seen in over five years, making it an opportune time for buyers to strike while the iron is hot to reap the long-term benefits of office ownership.
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.
©2020 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.
