NYC Office Condo Market Report — First Half 2017

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.

Availability stood at 695,197 sqft (6.4% rate) across 61 units in 33 buildings with an average asking price of $1,022/sqft. Midtown had 455,797 sqft available at $1,080/sqft, Midtown South 52,552 sqft at $1,079/sqft, and Downtown 186,848 sqft at $866/sqft.

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.