Market Overview
Office condominiums exist in nearly every market in the US and are particularly prevalent in Europe and Asia. However, they have been a small niche in New York City.
Market Overview
Office condominiums exist in nearly every market in the United States and are particularly prevalent in Europe and Asia. However, they have been a small niche in New York City.
There are 113 office condominium buildings in Manhattan, totaling 12.5 million square feet. Office condominiums represent only 2% of the 500 million-square-foot office market.
Benefits of Ownership
Significant Savings
The annual cost of office condominium ownership is historically less than the cost of leasing. Current market lease rates far exceed the annual office condominium carrying costs, which include common charges, real estate taxes and if applicable, mortgage payments.
Attractive Financing Costs
There are a variety of financing options that make owning an office condominium more affordable for businesses and non-profit organizations. Interest rates remain very low, and borrowers can often find loans as high as 90% loan-to-value, including construction costs.
Real Estate Tax Exemption
Many non-profit and government organizations are exempt from paying real estate taxes when they own and occupy an office condominium. Tenants leasing office space are required to pay real estate taxes regardless of their status.
Permanent Upgrades
From office furniture to glass conference rooms, designing and building an office space involves significant capital. When a business cannot renew their lease, they lose their investment and have to expend further capital to move and improve elsewhere. By owning office space, a business can justify a higher-end build-out that increases their competitive edge and improves the value of their real estate.
Stabilized Occupancy Costs
Office condominium owners are insulated from the escalating and unpredictable costs of leasing office space. An office condominium owner's occupancy costs remain stable and predictable, allowing for precise operating expense projections and easy budgeting, whereas tenants leasing office space are subject to the fluctuations of the leasing market and whims of landlords who may have conflicting objectives.
Investors
Income-producing office condominiums offer investors a unique opportunity to acquire well-located Manhattan real estate at prices significantly below traditional investment properties. Office condominiums are one of the best investment vehicles, with stable, predictable returns.
Sellers
The conversion to office condominium is a unique and highly profitable strategy. The demand from buyers far outweighs the supply of available office condominiums. Typical buyers include non-profits, doctors, jewelers, small businesses, foreign companies and investors.
The office condominium conversion strategy is the highest rate of return in the shortest period of time.
Market Data Snapshot
Key metrics from the Manhattan office condominium market
Buildings
106
Manhattan
Total SF
12.3M
Office condo inventory
Market Share
~2%
Of 500M SF office market
Avg Comp Sales
2,400+
Tracked since 2005
The RPG Office Condominium Report
Our semi-annual publication provides comprehensive analysis of Manhattan's office condominium market, including sales activity, pricing trends, and available inventory.