Office condo buyers are dipping their toes back into the market as the sluggish office environment offers steep discounts.
According to a biannual office condominium report from Rudder Property Group, a commercial real estate services firm exclusively specializing in the sale of office condominiums in the New York City, there has been a “definitive shift” in the market since the start of the pandemic.
“Though COVID-19 continues to significantly impact the office condominium market, findings in this new report illustrate buyers’ reemergence and the resulting increase in market activity levels,” said Michael Rudder.
“The pandemic has brought office condominium pricing to its lowest levels in over five years and companies are beginning to take advantage of these numbers and invest in the long-term benefits of office ownership. This offers a bright moment at the end of a difficult year.”
While office condominium sales slowed with the onset of COVID-19 in the first half of 2020, the Rudder report show buyers regained confidence in the market in the second half of year.
Sales totaled more than $140 million during the second half of 2020, marking a 73 percent increase in dollar volume over the first half of the year.
Despite fewer office condominium sales in the second half of 2020, the units sold were much larger. The 13 sales in the second half of 2020 averaged 15,000 s/f, which is more than double the size of the average office condominium sold in the first half of 2020. This is also 80-percent higher than the five-year running average.
The report also outlines an updated analysis of the impact of COVID-19 on the office condominium market.
While the average office condominium sales price decreased 12.6 percent in the second half of 2020 when compared to the first half of the year, and 18.5 percent when compared with the second half of 2019, Rudder analysis shows the effects to be far greater than either number.
To paint a more accurate picture of the pandemic’s effects on the office condominium market, the report analyzed the sales, both pre-COVID-19 and during COVID-19, of three different office condominium buildings. Results showed a 32-percent decrease in values of office condo units in the three buildings.
Though only a fraction of the total office condominium landscape, this finding provides a much better indicator of COVID-19’s true impact on the market.