The RPG Office Condominium Report
Second Half 2021 Office Condominium Sales
- Sales Velocity is Back to Pre-Pandemic Levels: The second half of 2021 saw high sales velocity, with a 127% increase in sales since the first half of 2021. Buyers continue to re-emerge, resulting in the highest number of transactions since the onset of Covid-19.
- Prices Continue to Inch Toward Peak Levels: Office condominium sales continue to increase, and they reached an average of $723 per square foot in the second half of 2021. This pricing is an 19% increase over the first half of 2021 but still 25% below the market peak of $934 per square foot in the first half of 2018.
- The Emergence of Conversions: During a soft leasing market, opportunistic owners are pursuing the office condominium conversion strategy. Another building, 32 West 39th Street, will soon come onto the market, after filing an offering plan with the Attorney General.
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 2021, there were 247,964 square feet of office condominium sales in Manhattan totaling $179,224,746. There were 34 office condominium sales, averaging 7,293 square feet per sale, at an average of $723 per square foot.
The 247,964 square feet sold in the second half is 60% more than the 155,344 square feet sold in the first half of 2021 and 43% higher than the five-year average of 173,970 square feet sold.
In the second half of 2021, office condominium sales totaled $179,224,746 which is 90% more than the $94,521,942 in sales for the first half of 2021. The dollar value of sales is 27% more than the five-year average of $141,646,103.
In the second half of 2021, the average price per square foot was $723. This is 19% higher than the first half of 2021 average of $608 per square foot and 11% lower than the five-year average of $812 per square foot.
There were 34 sales in the second half of 2021 compared to 15 sales in the first half of 2021. The number of office condominiums sold in the second half of 2021 was higher than the five-year average by 12 sales.
The Midtown submarket is Manhattan's largest office condominium submarket, comprised of approximately 6.1 million square feet. In the second half of 2021, there were 19 sales totaling 104,499 square feet. The dollar value of these sales totaled $87,099,746, averaging $833 per square foot.
The Midtown South submarket is comprised of approximately 3 million square feet of office condominiums. In the second half of 2021, there were 11 sales totaling 51,330 square feet. The dollar value of these sales was $40,165,000, averaging $782 per square foot.
The Downtown submarket is comprised of approximately 2.1 million square feet of office condominiums. In the second half of 2021, there were four sales totaling 92,135 square feet. The dollar value of these sales was $51,960,000, averaging $564 per square foot.
In the second half of 2021, there were 247,255 square feet of office condominium sales in Manhattan totaling $188,202,971. There were 37 office condominium sales, averaging 6,683 square feet per sale, at an average of $761 per square foot.
Market Overview (continued)
Square Footage of Sales: The 247,255 square feet sold in the second half of 2021 is 39% higher than the 178,041 square feet sold in the first half of 2021 and 21% higher than the five-year average of 203,933 square feet sold. Out of the 37 sales, the smallest sale was 793 square feet and the largest sale was 48,125 square feet.
Dollar Value of Sales: In the second half of 2021, office condominium sales totaled $188,202,971 which is 97% more than the $95,610,329 in sales for the first half of 2021. The dollar value of sales is 17% more than the five-year average of $161,392,473.
Average Price Per Square Foot: In the second half of 2021, the average price per square foot was $761. This is 42% higher than the first half of 2021 average of $537 per square foot and 4% lower than the five-year average of $791 per square foot.
Number of Sales: There were 37 sales in the second half of 2021, up 17 sales from the first half of 2021. The number of office condominiums sold in the second half of 2021 was 14 more than the five-year average of 23 sales.
Submarket Statistics
The Midtown submarket: In the second half of 2021, there were 21 sales totaling 109,059 square feet. The dollar value of these sales totaled $92,003,096, averaging $844 per square foot.
The Midtown South submarket: In the second half of 2021, there were 12 sales totaling 83,480 square feet. The dollar value of these sales totaled $75,165,000, averaging $900 per square foot.
The Downtown submarket: In the second half of 2021, there were 3 sales totaling 50,516 square feet. The dollar value of these sales totaled $17,434,875, averaging $345 per square foot.
Notable Office Condominium Sales
The Emergence of Conversions
By Rudder Property Group
R&B Realty Group, a family-owned real estate investment, management and development firm, filed an offering plan with the Attorney General to convert 32 West 39th Street to office condominiums.
32 West 39th Street is a 16-story, 87,072 square foot office building located one block south of Bryant Park and adjacent to Amazon's new Fifth Avenue headquarters. The building is centrally located between Grand Central Terminal and the Penn District. R&B Realty Group is converting the building in response to exceptional market demand for, and scarcity of, full-floor units and multi-floor office condos within Midtown.
"As a former owner-operator of a successful business, as well as a real estate investor, I have always seen the long-term value of owning your own space," said Aron Rosenberg, President of R&B Realty Group, owner of 32 West 39th Street. "I have always found it interesting there aren't more office condos in New York City, and I am thrilled to help fill this void by offering full-floor units for sale at our excellent building on 39th and Fifth Avenue."
The effects of the pandemic on the office market have made a growing number of building owners consider the office condominium strategy versus continuing to lease. Demand continues to outweigh available supply, making office condominium conversions a unique and profitable strategy to navigate a soft market.
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.
©2021 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.
