Vacant Office and Retail Are in High Demand as Users Abound and Speculators Retreat

Given today’s political and policy headwinds, along with an increasingly active City Council exploring proposals that could materially affect the real estate landscape, one might reasonably expect users to hesitate before committing billions of dollars to their own buildings. By conventional logic, this would seem like a moment to redeploy New York City gains into higher-yielding opportunities elsewhere, perhaps even 9 percent caps in markets like Indiana.

So why can’t I keep any vacant office and retail buildings on the shelf? And why do we continue to achieve benchmark pricing? Are our buyers making the John Paulson bet, swimming against the tide? Or are they simply studying historical values and recognizing that the nearly $1,000 per square foot median price of loft and office buildings in 2019 makes the median $312 per square foot sale price today a raging value. I sense this is the simple answer.

Over the last twenty years and more than 1,200 closings, I have sold scores of vacant buildings in New York City. In 2025 alone, we sold six and counting. Historically that is on par for our annual volume, but the buyer pool is completely different these days. Gone are the private equity firms buying vacant buildings to lease up higher than their analysts projected for outsized returns in low interest rate environments. More than 90 percent of the vacant office and retail deals we are doing are being purchased by all manners of users who want their own slice of the Big Apple. And they are getting discounts relative to market highs.

Perhaps it is the record breaking New York City office and retail leasing volume and pricing of 2025 Q1 through Q3 that has caused such sticker shock to users. Or perhaps they understand that the tax benefits of owning real estate, which inevitably appreciates over time, beat paying rent at increasingly record rates.

For instance, just last month we exclusively represented for sale 5 East 47th Street, a 25 foot wide vacant elevator office building purchased for $18,300,000 in 2015. We took it to market seeking just $10,000,000 or $570 per existing foot. After almost a year of marketing and seventy tours, the top bid came from a seemingly unlikely victor, Liberty Bagels. Liberty’s owners, Victor Mejia and Alex Vitkoulgos, have more than thirty three years of bagel experience and their flagship Liberty Bagels now boasts five locations with two more under construction. They also expect to begin franchising in the coming months. So why would an up and coming food and catering retailer buy a B minus office building 100 feet off Fifth Avenue. Simple. Price per pound and discount to the zenith. Fifty percent off sales simply produce tons of buyers.

Earlier this year we served as the fourth broker over six years for the landmarked former Bowery Savings Building, The Capitale at 130 Bowery. A gorgeous neoclassical landmarked event space zoned only for event use. And landmarked to boot. A few years ago the owners were allegedly offered more than $40,000,000 for the 32,000 square foot, sixty five foot high neoclassical former bank building. After 62 tours that ranged from Forbes list billionaires, art concerns, nation states, a major sports league seeking experiential retail, and even a top forty rock band seeking their own event space, the winning bidder was a Bukharian kosher caterer who used his own money to purchase the building for $20,000,000, still a soaring $625 per foot. We examined the numbers and polled prominent local caterers on their rent and expense costs. Up to 15 percent of gross annual income is allocated to rent and another 1 percent to 4 percent to renters insurance. So it makes perfect sense for a successful caterer to buy a building, reduce fixed costs, earn depreciation, take management fees, and own a piece of the Big Apple which, despite political uncertainty and cashless bail, will inevitably yield appreciation in the years to come.

Not-For-Profits do not normally spend tens of millions on new edifices. We represented, along with my dear friends Will Silverman and Gary Philips, the Walt Disney Corporation on the broad marketing and sale of their landmarked armory, 56 West 66th Street, also known as the Castle. Months after closing on the sale of its West 4th Street building for $75 million, Hebrew Union beat several private equity firms, global auction houses, higher education institutions, and even a billionaire who wanted to house her charities. Paying $749 per existing foot for a vacant building, Hebrew Union secured a phenomenal hundred year old fortress steps from Central Park to house its main campus. Why pay rent? And remember, not for profits do not pay real estate taxes.

Over the next week, we expect to close on the sale of another exclusive engagement in the heart of SoHo: a pair of classic cast-iron buildings with ground-floor retail and a mix of loft office and residential above. Having sold more than forty buildings in SoHo over the years with my longtime partners, we are no strangers to global marketing efforts in one of Manhattan’s most coveted and tightly held submarkets.

That said, targeting north of $1,400 per existing square foot, with vacant retail and the prospect of a future flagship-style tenant, was no small task. Most bidders stalled in the high-$20 million range. Ultimately, we identified a user: a privately held, high-end fashion brand willing to pay full freight at just under $32 million. Once again, they recognized that in an environment of rising retail rents and limited tax advantages, owning the real estate can be the more compelling long-term play

In sum, New York City has many vacant and mostly vacant quality buildings. I sense more businesses, not for profits, retailers, and foreign concerns will buy these buildings, self manage, pay themselves rent, enjoy the appreciation, and laugh when New York City turns the corner and becomes again a safe and business friendly environment like it was under the Giuliani and Bloomberg Administrations. Of course, I will probably be in Florida by the time that happens working on my golf game and my perma tan.

See you all out in the field.

Sources: Public.tableau.com and Office of the New York City Comptroller