New York’s City’s office condo market experienced a record first half of the year in 2018, according to a new report.
Rudder Property Group’s Office Condominium Report found that in the first half of 2018, there were 250,000 s/f of office condos sold, totaling $237 million in sales. The total square footage of sales nearly doubled in the first half of 2018 compared to the second half of 2017.
In terms of pricing, condo sales hit a record high in the first half of 2018, with average price psf reaching $934. That average was 23 percent higher than the five-year average of $758, according to the report.
“The office market remains very strong” said Michael Rudder, principal of the Rudder Property Group. “Office condominium purchasers are looking to avoid paying high rents and to reap the long term benefits of Manhattan real estate ownership.”
Some of the biggest deals so far this year included the sale of the 18th floor of 420 Fifth Avenue in Midtown for $19.7 million. The seller was Techint, Inc, an Italian industrial company that had owned the floor since 1995. Luxottica Group, an eyewear company, purchased the 17,550 s/f condo in March for $1,123 psf.
A construction and general building laborers union, Local 79, purchased the entire 7th floor and a portion of the 8th floor—a total of 19,105 s/f — at 131 West 33rd Street in March for $18 million, or $945 psf. The seller was Progressive Credit Union, which still owns the remainder of the 8th floor, totaling 5,031 s/f.
The report found that the niche office condo market, which historically has been known to draw non-profits, small businesses and doctors, has recently been attracting a wave of major corporate users who have purchased rather than leased their office space.
One of the biggest has been Google, which recently purchased Chelsea Market for $2.4 billion, and WeWork, which purchased the Lord & Taylor building last Fall for $850 million.
In Hudson Yards, Time Warner, Wells Fargo, and KKR all purchased office condos at the forthcoming office tower 30 Hudson Yards, which will be the second-tallest building in NYC once completed.
The Manhattan office condo market is made up of 99 buildings that together occupy a total of 10.9 million square feet. Midtown South makes up 2.8 million s/f of the market, while Downtown makes up 2.1 million s/f. The types of office space include 3.4 million s/f of Class A office condos, 5.4 million s/f of Class B, and 2.1 million s/f of Class C.