Home & Office Values Lag; Retail & Hospitality Metrics Inch Upward
The Downtown Alliance’s quarterly analysis of Lower Manhattan real estate trends, covering the first three months of this year, finds that apartments (both rentals and owner-occupied units) are falling in price, but the value of office space is even more distressed.
Residents who rent are now paying a median of $4,100, which is 3.0 percent lower than the first quarter of 2023. The median purchase price for condominium and cooperative units has dropped to $930,000—a trough last reached in 2013. This benchmark is 11 percent lower than the same figure for Manhattan as a whole, an inversion of the usual relationship in which Lower Manhattan homes are more expensive than those in the entirety of the borough.
Elsewhere, the Alliance’s report notes, “Lower Manhattan office leasing improved over the start of 2023 but remains below both the five-year and post-pandemic quarterly averages.” The overall vacancy rate increased to 24.7 percent, a record high.
These tallies might have been even worse but for the disappearance of large tracts of office space from the calculations, because many towers are slated for conversion to apartments. Most notable among these is 111 Wall Street, where 1.2 million square feet of newly renovated (but never occupied) office space is now under consideration to be repurposed into 1,300 apartments.
“As residential conversions continue to entice developers,” Downtown Alliance president Jessica Lappin said, “the health of the commercial real estate market in Lower Manhattan could ultimately stand to benefit. These conversions will not only give more housing options to our residential population, but will help reset the supply and demand across the office sector, as low-demand space leaves the market.”
On a more positive note, 16 new retail outposts (two-thirds of which are food and beverage businesses) opened in Lower Manhattan during the first three months of 2024, while another ten announced plans to debut soon. Also encouraging were metrics for the local hotel industry, which reached its highest average daily room rate (of $225.69) in eight years, and the highest occupancy rate (74 percent) since 2008.