Office condo market showing signs of revival

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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.

MICHAEL RUDDER

“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.

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