The coronavirus pandemic put brakes on the office condominium market in Manhattan. And the recovery likely won’t be quick, according to industry veterans.
Manhattan’s office condo market saw a 66 percent decline in sales volume during the first six months of 2020 compared to the last six months of 2019, according to data from Rudder Property Group. The figure, about 98,000 square feet, is the lowest amount of square footage sold in a six-year period in more than a decade, Rudder found.
Manhattan’s office condo market consists of about 11 million square feet, or about 2 percent of the borough’s total office space.
But the impact of the pandemic has been visible in this niche sector, said Michael Rudder, whose brokerage focuses exclusively on office condo sales. He noted that the office condo sales that occured in the first half of 2020 were already negotiated months before Covid-19.
“I think if you were to take from the shutdown to today, basically nothing has been sold. And I suspect over the next half year, the stats will be even lower than that,” Rudder said.
The average sales price to date in the first half of 2020 also decreased to $826 per square foot, down 6.8 percent from the roughly $886 per square foot in the second half of 2019.
Notable sales during the first half of the year included the 19th floor of 633 Third Avenue for $12.5 million ($631 psf); the third floor of 305 Seventh Avenue for $7.5 million ($791 psf); the fourth floor of 141 Wooster Street for $7.2 million ($872 psf); the 11th floor of 25 West 31st Street for $4.5 million ($776 psf); and unit 600B at 36 West 44th Street for $4 million ($1,007 psf).
Because of the uncertainties due to the pandemic, many companies and investors are holding off a decision to purchase office condos, said James Nelson, a principal and head of investment sales in the tri-state for Avison Young.
“I think a lot of companies and investors are probably on the sidelines, taking a little bit of a wait-and-see approach,” Nelson said. “But we have no doubt that when the rest of the market returns, so will office condos and co-ops.”
Avison Young broker David Lawrence added that some investors, particularly international firms, would rather purchase an office condo than an entire building, which requires a larger capital outlay.
“That’s an area where we’ll see a little bit more demand going forward,” he said.
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Contact Akiko Matsuda at [email protected]