Buyers in New York City are clamoring for apartments with their own outdoor space — and now it’s clearer how much more they’re willing to pay for them.
The sale of apartments with a private terrace or balcony by about 40 percent, but how much have prices changed? A new report from Garrett Derderian, director of market intelligence for: SERHANT., trying to find that out. Derderian looked at apartment and co-op sales in Manhattan and Brooklyn before and after the lockdown and found that the premium paid to outdoor space contracts increased significantly.
He compared sales from July 2018-November 2019 (pre-lockdown) to July 2020-November 2021 (post-lockdown) – in July 2020, in-person screenings were allowed to resume in NYC. Only apartments with private outdoor space connected to the unit are considered; mansions were excluded from the report.
He found that before the pandemic, the median selling price of a Manhattan apartment with private outdoor space ($1,440,000) was 31 percent higher than a unit with no private outdoor space ($1,100,000), giving those apartments a 31 percent premium. got.
In Manhattan after the lockdown, the premium for outdoor space rose from 31 to 39 percent, even as prices for apartments in Manhattan fell in general.
Derderian says he thinks outdoor space will continue to command higher prices in the future, even as apartments with no outdoor space begin to recover with the return of international buyers to the NYC market.
It makes sense that buyers would rethink the importance of outdoor space, given the dramatic experience of living in NYC during the height of the pandemic, when going out in public spaces felt unsafe and private outdoor space became something like an escape valve. And with Covid cases on the rise, it doesn’t look like NYC — or the rest of the world — will return to what life was like before the pandemic anytime soon.
For the post-lockdown period, the median retail price for a Manhattan apartment with outdoor space was $1,495,000 — 39 percent higher than an apartment with no outdoor space ($1,075,000) and a 4 percent increase over the pre-Covid Prices.
Manhattan apartments with outdoor space were able to command higher prices, even as the wider NYC retail market saw a price drop. For units without outdoor space, the median sales price after the lockdown was 2 percent lower. The average price and the price per square meter showed a sharper drop of 7 and 8 percent respectively.
“While prices fell and discounts rose in the immediate aftermath of the resumption of in-person screenings, homes with private outdoor space rose in value, and have continued to do so as the broader market recovered,” says Derderian.
Likewise, Brooklyn apartments and co-ops with outdoor space sold for more than units without. Before closing, the median selling price of a Brooklyn apartment ($779,481) was 14 percent higher than a home without it. In the post-lockdown period, these units increased more compared to units with no outdoor space, but not at the same rate as Manhattan apartments.
The median selling price for a Brooklyn apartment with outdoor space after lockdown was $950,000, an 18 percent premium over places with no outdoor space, and 22 percent compared to pre-lockdown prices.
Derderian notes, however, that Brooklyn apartments with no outdoor space have also risen in price during the pandemic (18 percent), thanks to strong demand for the neighborhood in general.
How sellers can calculate the price of outdoor space
The Derderian report found that after the lockdown, Manhattan apartments with outdoor space sold for an average price per square foot of $1,625, compared to $1,345 for apartments with no outdoor space. That represents a 21 percent premium and a 3 percent increase over pre-lockdown prices. (Averages are often skewed by luxury property prices).
Brooklyn apartments with outdoor space sold for $1,036 per square foot, compared to $995 per square foot for apartments with no outdoor space, the premium here is smaller (4 percent), but it increased 12 percent compared to pre-lockdown prices.
Determining the value of outdoor space has never been a simple equation, but rather an equation that depends on several variables, such as the value of the apartment to which it is attached: a 500 square meter terrace gives more value to a luxury apartment than to a cheaper one. apartment.
This 2010 blog post about understanding the value of Manhattan apartment outdoor area by Jonathan Miller, president and CEO of valuation firm Miller Samuel, is his most popular, he noted during a recent webinar with UrbanDigs CEO Noah Rosenblatt and COO John Walkup who was moderated by Phil Horigan, founder of leasebreak.com.
Miller’s general rule of thumb is that a patio is worth 50 percent of the price per square foot of interior space. So if the interior of an apartment is $1,000 per square foot, and the patio is 500 square feet, then the patio could be worth $250,000, or $500 per square foot times 500 square feet, Miller writes.
During the webinar, Miller noted that you could have two patios with the same total area, but if one is a narrow wraparound patio and the other is rectangular, the first can add 25 cents to each dollar and the second 50 cents to the top. dollars.
This is not a formula, but a starting point for determining the value of outdoor space, he says.