NYC Office Condo Market Report — Second Half 2019

At a Glance

• Prices Up from First Half: The average price per square foot in the second half of 2019 was $886, which is 7% higher than the first half of 2019.
• Sales Velocity More Than Doubles: Due to two large sales, one at 809 United Nations Plaza and the other at 866 United Nations Plaza, the amount of square footage sold in the second half of 2019 more than doubled compared to the first half of 2019.
• A Decade in Review: While office condominiums have existed in New York for over 40 years, the market has experienced growth and more widespread acceptance over the past decade. The value of office condominiums have increased by 42% over the past decade, and there have been 11 new office condominium buildings brought to the market, totaling 1,174,357 square feet.

Market Overview

The Manhattan office condominium market is made up of 100 buildings, occupying a total of 10.9 million square feet. The Midtown submarket is comprised of 6 million square feet; Midtown South is comprised of 2.8 million square feet; Downtown is comprised of 2.1 million square feet. There are 3.4 million square feet of class A office condominiums, 5.4 million square feet of class B, and 2.1 million square feet of class C.

In the second half of 2019, there were 292,068 square feet of office condominium sales in Manhattan, totaling $258,737,909. The sales averaged $886 per square foot. There were 19 office condominium units sold in 14 different buildings, averaging 15,372 square feet per sale.

Square Footage of Sales

The square footage of sales were more than double in the second half of 2019 compared to the first half of 2019. There were 292,068 square feet sold in the second half of 2019 and 136,137 square feet in the first half of 2019. The square footage of sales is 52% higher than the five-year average of 191,711 square feet per half-year.

Dollar Value of Sales

In the second half of 2019, there were $258,737,909 in sales, which is significantly higher than the $112,885,955 in sales in the first half of 2019. The dollar value of sales is 57% more than the five-year average of $164,418,310.

Average Price Per Square Foot

In the second half of 2019, the average price per square foot was $886. Pricing was higher than the first half of 2019 average of $829 per square foot. The average price per square foot was 3% higher than the five-year average of $858.

Number of Sales

There were 19 sales in the second half of 2019 compared to 20 sales in the first half of 2019. The number of office condominiums sold in the second half of 2019 was also 29% lower than the five-year average.

Submarket Statistics

The Midtown submarket is Manhattan's largest office condominium submarket, comprising approximately 6 million square feet. In the second half of 2019, there were 18 sales totaling 284,452 square feet. The dollar value of these sales totaled $252,537,909, averaging $887 per square foot.

The Midtown South submarket comprises approximately 2.8 million square feet of office condominiums. In the second half of 2019, there was one sale totaling 7,616 square feet. The dollar value of this sale was $6,200,000, $814 per square foot.

The Downtown submarket comprises approximately 2.1 million square feet of office condominiums. In the second half of 2019, there were no sales in the Downtown submarket.

Availability

There is 1,052,894 square feet of available Manhattan office condominiums, which equates to a 9.6% availability rate. A total of 126 units are for sale in 51 buildings, with an average asking price of $933 per square foot. In the Midtown submarket, there is 657,751 square feet for sale with an average asking price of $941 per square foot. In the Midtown South submarket, there is 185,527 square feet for sale with an average asking price of $1,059 per square foot. In the Downtown submarket, there is 209,616 square feet for sale with an average asking price of $797 per square foot.

While office condominiums have existed in New York for over 40 years, the market has experienced growth and more widespread acceptance over the past decade.

The average price per square foot has increased by 42% over the past 10 years, when comparing the average of the first half of the decade to the second half. From the first half of 2009 to the second half of 2014 the average price per square foot was $604. From the first half of 2015 to the second half of 2019 the average price per square foot was $858.

820 Second Avenue Case Study

To highlight the appreciation in pricing over the past decade we compare two office condominium sales at 820 Second Avenue. In September 2009, Pierre Funding Corp purchased unit 7C, a 3,609 square feet office condominium for $1,700,000, $351 per square foot. In September 2019, Heritage Way Advisors purchased unit 13C, a 1,197 square foot office condominium for $900,000, $752 per square foot. The increase in the sales price per square foot in the 10 years is 114%.

Office Condominium Conversions

Over the last decade there have been 11 buildings either converted or newly constructed as office condominiums. The 11 office condominium buildings total 1,174,357 square feet, and they contain 258 units.

A sizable percentage of the additional square feet came from the office condominium conversion at 866 United Nations Plaza. The property was purchased at the end of 2013 by Meadow Partners and added 471,000 square feet to the office condominium market. Recent purchasers include the Mission and Consulate of Saudi Arabia, the Permanent Mission of Lebanon and the Desai Sethi Foundation.

The most recent office condominium conversion occurred in 2019, when Hidrock Properties converted 35 West 36th to office condominiums. The 81,000 square foot, 12-story building is located in the heart of the garment district and contains 24 units.