Commercial Real Estate News
Manhattan Office Condo Sales Dip in 2022, Yet Prices Hold
According to New York commercial consultant Rudder Property Group's recently released biannual office condominium report for the first half of 2022, Manhattan office condo sales are on the decline.
"The combination of interest rate hikes, recession fears and inflation has caused the overall real estate market to take a pause, including Manhattan office condominiums. When the economy settles into a more stable state we expect that businesses and organizations will recognize the long term benefits of office ownership and will have new ownership opportunities like the office condominiums at 65 West 55th Street," said Michael Rudder, principal of Rudder Property Group.
The Manhattan office condominium market is composed of 103 buildings comprising 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.
Other key findings include:
- Sales Velocity Drops by Half: The first half of 2022 saw sales velocity cut in half with a 53% decrease in total square footage sold since the second half of 2021. For the first time in over a decade there were no office condominium sales in the Downtown submarket in the first half of 2022.
- Prices Increase but Remain Lower Than Five-Year Average: Office condominium pricing continues to increase, and they reached an average $773 per square foot in the first half of 2022. This pricing is a 7% increase over the second half of 2021 but still 4% below the five-year average of $807 per square foot.
- Interest Rate Hike Impact: The recent interest rate hikes has increased the annual office condominium ownership costs from $55 per square foot to $60 per square foot. Even with increased interest rates, office ownership costs considerably less than leasing over a 5-to-10-year period.
- Square Footage of Sales: The 116,591 square feet sold in the first half is 53% less than the 247,964 square feet sold in the second half of 2021 and 33% lower than the five-year average of 173,825 square feet sold.
- Dollar Value of Sales Down 50%: In the first half of 2022, office condominium sales totaled $90,084,669, which is 50% less than the $179,224,746 in sales for the second half of 2021. The dollar value of sales is 36% less than the five-year average of $140,322,282.
- Average Price Per Square Foot Increased 7%: In the first half of 2022, the average price per square foot was $773. This is 7% higher than the second half of 2021 average of $723 per square foot and 4% lower than the five-year average of $807 per square foot.
- Number of Sales Down Slightly: There were 18 sales in the first half of 2022 compared to 34 sales in the second half of 2021. The number of office condominiums sold in the first half of 2022 was lower than the five-year average by three sales.
- Availability Rates Increased 1%: There are currently 1,152,009 square feet of office condominiums available in Manhattan (159 units are for sale across 73 buildings) with an average asking price of $925 per square foot. This equates to a 10.3% availability rate which is a 1% increase from the second half of 2021.
