The New York City commercial real estate market had a decent year in 2019. Rents and property prices increased, and investor demand remained strong for investment-grade real estate. Developers worked tirelessly to keep up with the need for NYC office space, building ground-up developments in areas like Hudson Yards and redeveloping projects in Chelsea and Williamsburg.
During 2019, investors spent millions of dollars on trophy office assets in busy business corridors. While Chinese investors no longer buy high-rises in Manhattan, the market is still doing well. Investor appetite is high, not only in Manhattan but also in Brooklyn, Queens, and the Bronx. Development is getting intense in Long Island City, for example, thanks to Amazon, which placed Queens on every investor’s map. In addition, Google and Facebook are expanding in the city, showing investors that NYC’s tech industry is flourishing.
We compiled a list of the 50 biggest office deals that closed in 2019 to identify where investor activity is most concentrated.
We based our findings on Rolling Sales data from the NYC Department of Finance, which includes all office sales in the city from January to October 2019.
You can find the complete list below, as well as some highlights that we’ve included.
Manhattan Ends 2019 on a $9B High Note
Manhattan remains the top choice for big office sales in NYC. Many companies want a Manhattan address, and investors trust the market’s allure. So, 40 of the 50 office deals on our list closed in Manhattan, totaling $9.25 billion.
Additionally, the top 23 sales on our list were all in Manhattan. The biggest was the sale-leaseback of 30 Hudson Yards for $2.15 billion. WarnerMedia sold its space to Related Companies but still leased 1.5 million square feet of office space there. Related partnered with Allianz and reportedly used a $1.4 billion CMBS loan from Deutsche Bank, Goldman Sachs, and Wells Fargo to finance the acquisition.
Coming in at number 2 – and 3 – on our list is the Coca-Cola Building, otherwise known as 711 Fifth Avenue. The Central Midtown office building made the news twice this year, changing hands twice in the same quarter. First, The Coca-Cola Company sold the building to Nightingale Group and Wafra Capital Partners for $909 million in August. Then, an unexpected turn occurred when the new owners sold the building for $937 million to an SHVO and Bilgili Group partnership in September. It’s uncommon for a trophy office building to sell twice in two months, especially at such a high price, even in Manhattan.
Another notable sale in 2019 was Google’s $592 million purchase of 450 West 15th Street from Jamestown in May. The Chelsea office building, also known as the Milk Studios Building, will house Google employees just one block from the tech company’s headquarters. The former industrial building, which housed Milk Studios since 1998, is also home to Giorgio Armani and Tod’s and is conveniently located at the border between Chelsea and the Meatpacking District, appealing to both tech companies and businesses in the fashion industry.
Outside Manhattan- The Bronx Had 2019’s Largest NYC Office Sale
The first 23 entries on our Top 50 NYC office sales list closed in Manhattan. Number 24 occurred in The Bronx neighborhood of Hunts Point.
2019’s 24th-ranked NYC office sale involved a transaction at 890-938 Garrison Avenue. In this transaction, iStar purchased the BankNote Building’s ground lease from Madison Marquette through its Safehold REIT for $64.5 million.
The 1909-dated construction is a 400,000-square-foot office and retail complex. The American Bank Note Company once called this property its headquarters. However, nowadays, after a $20 million renovation, the building boasts modern amenities and a chic industrial aesthetic and attracts creative office tenants.
Additionally, a Commercial Observer report reveals that Madison Marquette and iStar reportedly refinanced the property via $93 million from Bank of America.
The 43rd-ranked 2019 NYC office sale also occurred in The Bronx. Selby Transportation Corp. acquired 3900 Webster Avenue in Williamsbridge from Greg Blinn for $16.5 million in this January transaction. Greg Blinn may ring a bell, as Blinn was listed as president of the John Galt Corp., the firm responsible for demolishing the Deutsche Bank building at 130 Liberty Street in 2006. At the time, 3900 Webster Avenue was the reported location of The John Galt Corp.’s headquarters.
Brooklyn Wraps up 2019 with $110M in Dollar Volume from 4 Major Sales
Brooklyn had 4 notable NYC office sales on 2019’s Top 50 list totaling $110 million in dollar volume. These figures made it the second most active borough for 2019 NYC office sales.
The biggest office deal in the borough happened in June. BFC Partners Jonathan Butler and Goldman Sachs sold 1000 Dean Street in Crown Heights to LIVWKR for $56 million. The revamped historic 150,000-square-foot commercial building caters to Brooklyn’s thriving small business community and creative office tenants. Moreover, the building benefits from a convenient location, close to Prospect Heights, Fort Greene, Bed-Stuy, and Park Slope.
Other notable deals to close in Brooklyn included:
- The $18.5 million sale of 325 Avenue Y in Ocean Parkway-South to Yeshivat Darche Eres.
- The $18 million sale of 1623 Kings Highway in Midwood to the Interborough Developmental and Consultation Center.
- The $17.5 million sale of 2357 60Th Street in Borough Park to Samuel Weiss.
Four Office Sales in Queens Totaling $67M Earn a Spot on the List
In early 2019, Amazon decided against establishing its second headquarters in Long Island City due to blowback from several opposition groups. Amazon’s reneging on its Long Island City plans means that it will no longer create 25,000 new jobs. Eventually, Amazon did strengthen its commitment to NYC by signing a 335,000-square-foot office lease in Hudson Yards earlier this month.
Be that as it may, the interest from Amazon put Queens on the map for real estate investors. Many saw an opening to fill the vacancy left by Jeff Bezos, with developers flocking to Queens and constructing luxury residential towers and modern office buildings.
Queens had four entries on 2019’s biggest NYC office sales list. The largest sale of the year took place in late May. Century Development Group’s acquisition of 11-40 45th Road in Long Island City was the largest, coming in at #33. Purchased from the Radha Soami Society Beas-America for $26 million, the two-story building is a study center for the spiritual organization, according to The Real Deal. The property is zoned for residential, and can be turned into as much as 124,200 square feet under inclusionary housing.
Other big 2019 NYC office sales in Queens include:
- Hazelton Capital Group acquired 39-40 30th Street for $15.2 million.
- Ui Kun Lee purchased 61-56 Springfield Boulevard for $14.6 million.
- Joseph Azzopardi acquired 4515 36th Street for $11.5 million.
Data sources: New York City Department of Finance, Rolling Sales data, January through October 2019.
The Key Takeaway
The commercial real estate market in New York City showed strong signs of growth in 2019. Rising rents, property prices, and sustained investor demand for investment-grade real estate were key drivers of NYC office sales.
While Manhattan continued to lead in office sales with the majority of top NYC office sales, notable sales outside of Manhattan garnered significant attention. For example, the Bronx made waves with the BankNote Building’s acquisition. In addition, 1000 Dean Street in Brooklyn demonstrated increasing demand for office space for creative tenants and a thriving small business community in Brooklyn. Queens also saw 4 significant transactions of its own.
Overall, this suggests that the commercial real estate market in New York City remains healthy, robust, and likely to continue to grow.
Looking to lease modern office space in a prime location in Manhattan with top-notch amenities? Metro Manhattan Office Space can help you turn your vision into a reality and find the perfect office space for your business needs. To learn about available space, call (212) 444-2241 or email [email protected].