Office Condos Are Proving To Be A Win-Win For NYC Businesses And Investors Alike

NYC businesses are realizing that they can have their cake eat it too buy buying their own office space.

By Jeff Vasishta January 26, 2017

“Why pay rent when you can buy?” is the popular slogan aimed at first time home buyers. Now it also applies to Manhattan businesses. As NYC office rents head for the skies, businesses are getting shuffled around like a deck of cards in Vegas. The lack of stability has caused some to think outside the box. Few small to mid-size businesses can afford to buy an office building. But an office condo—a portion of an office building (referred to as a “Unit”) that can be purchased, rather than leased, from the owner/developer of the office—is a different matter. No only do businesses have the advantage of owning the space they work in—but they also benefit from appreciation and tax deductions.

The concept isn’t new. They came popular in the ’80’s as a way for struggling building owners to recoup some quick cash, selling for more individually than they could as an entire property. Now a group of investors is about to give the concept a turbo boost, pitching the spaces for outside investors who don’t actually have a business in the building.

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Crain’s reports that Michael Rudder, the founder of Rudder Property Group, a brokerage firm that specializes in office condos is marketing several buildings. They are two adjacent office properties at 18 and 20 West 33rd Street and 866 U.N. Plaza, as well as at the base of the large East Side residential building the Corinthian. Investment-buyers keen on maximizing cash flow and minimizing tenant headaches associated with residential occupants are his primary audience.

“It’s a billion-dollar idea,” said Rudder. “By focusing on sales to investor groups, it really opens up any building in the city to become an office-condo conversion.” It also alleviates the headache of first vacating a building and risk losing income while it converts to an office condo. Existing tenants can start paying rent to outside investors in a turnkey move.

Rudder is about to unveil a website which will outline his ideas and streamline the process of being a commercial condo landlord. A big appeal for investors is the stability of tenants that a commercial condo offers, such as medical practices and embassies—long term tenants that are investment nectar. Rudder is aiming for $400 million of sales at 866 U.N. Plaza. So far, around a third of the units have been sold Rudder told Crain’s.

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Helping Rudder’s cause are the examples he can quote from other office condo sales. The Wall Street Journal reported that property tax-law firm, Marcus & Pollack LLP paid $27 million for $44,500 square feet at 633 Third Ave. It will use 12,000 square feet and sell the rest.

“Rather than pay rent in the mid $60’s [a square foot], we could actually own for less. We ultimately believe this is going to appreciate, particularly the East Side Midtown market where we have improved transportation.”

On the lower end, The Journal reported that having an equity stake in Manhattan real estate was a big draw for Virginia & Ambinder LLP., an employment-law firm which paid $3.68 million for about 9,200 square feet at 40 Broad St. Amenities such as a terrace and a spa sweetened the deal said partner Charles Virginia. The building, known as the Setai Wall Street, also has luxury residential condos.

“As long as business stays good the next 10 years or so, we will hit a home run financially, and that is even without appreciation,” Mr. Virginia said.

A no-brainer in by any standards.


Jeff Vasishta



Jeff is a writer, husband and father but not necessarily in that order. As a music journalist he counts Prince, Beyonce and Quincy Jones amongst those he’s interviewed. He's also owned and flipped homes in Brooklyn, NJ, CT and PA.

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