Why rent when you can buy?
As rents rise, more and more small and mid-size firms and nonprofits are opting to buy their work spaces in the city’s burgeoning office condo market.
Average sales prices for office condos in Manhattan have climbed to $886 a square foot, an increase of 43 percent from 2012, according to Cushman & Wakefield.
“People like engineers, law firms, contractors and consultants—small to midsize businesses—are entering the space to buy these floors,” said Cushman’s David Lebenstein told the Wall Street Journal. “They have all seen the appreciation in New York City and they want a piece of the action.”
In one example, tax-law firm Marcus & Pollack LLP paid $27 million for 44,500 square feet at 633 Third Avenue to owner Time Equities. It plans to use 12,000 square feet and sell the remainder.
“Rather than pay rent in the mid $60s [a square foot], we could actually own for less. We ultimately believe this is going to appreciate, particularly the East Side Midtown market where we have improved transportation,” Robert Pollack, one of the firm’s partners, said.
Time Equities has converted several other office buildings from rental to condo to meet demand, including 131 West 33rd Street and 70 West 36th Street in Chelsea, and 125 Maiden Lane in the Financial District.
Despite the renewed interested, owner-occupied office space still makes up only 2.3 percent of all the total Manhattan office market, according to Cushman & Wakefield. [WSJ] – Ariel Stulberg