NYC Office Investors Remain Bullish on Future Despite Challenges

Inflation, interest rate hikes, a scarcity of financing, and high vacancies due to remote working has not diminished New York City office investors’ optimism on the future. Banking on the long-term recovery of the city’s office market, investors continue to make “bullish bids” amid a more expensive deal-making environment — even though plenty of cash remains on the sidelines. There has been an uptick of interest in the Grand Central area fueled by the opening of One Vanderbilt and the excitement of the planned redevelopment of the existing Grand Hyatt Hotel at 175 Park Avenue into a 1,575-foot tall office, retail and scaled-down Hyatt hotel development adjacent to Grand Central Terminal on the east side. Ongoing activity serves “as proof that, despite mounting challenges in the market, any ripple or pause is seen as an opportunity by those who want an entrée or expansion in the Big Apple at some of the lowest price points in years.”

Shifting to the residential market, interest among global investors continues to flow, but the lack of a continuing 421a-type tax abatement has halted outer borough land sales, while Manhattan sale activity is still trading, “but only for new build condominiums.” Other sale activity that has recently seen some growing interest is in the office to residential conversion market, particularly in Manhattan’s downtown area where the sale offerings of some outdated office towers destined for residential use are attracting buyers.