New York City buyers have been clamoring for apartments with private outdoor space—and now it’s clearer just how much more they are willing to pay for them.
Sales are up for 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., attempts to figure that out. Derderian looked at sales of Manhattan and Brooklyn condos and co-ops before and after the lockdown and found the premium that outdoor space commands rose significantly.
He compared sales from July 2018-November 2019 (pre-lockdown) to July 2020-November 2021 (post-lockdown)—July 2020 was when in-person showings were allowed to resume in NYC. Only apartments with private outdoor space connected to the unit were considered; townhouses were excluded from the report.
He found that prior to the pandemic, the median sales price of a Manhattan apartment with private outdoor space ($1,440,000) was 31 percent higher than a unit without private outdoor space ($1,100,000)—giving those apartments a 31 percent premium.
In Manhattan, after the lockdown, the premium that outdoor space commanded increased from 31 to 39 percent—even as prices fell for Manhattan apartments in general.
[Editor's note: An earlier version of this post was published in November 2021. We are presenting it again here as part of our winter Best of Brick week.]
Derderian says he thinks outdoor space will continue to command greater prices going forward, even as apartments without outdoor space start to recover with the return of international buyers to the NYC market.
It makes sense that buyers would rethink the importance of outdoor space, considering the dramatic experience of living in NYC during the height of the pandemic, when going out in public areas felt unsafe and private outdoor space became something like an escape valve. And with rising Covid cases, it doesn't seem like NYC—or the rest of the world—will return to the way life was before the pandemic anytime soon.
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For the post-lockdown period, the median sales price for a Manhattan apartment with outdoor space was $1,495,000—39 percent higher than an apartment without outdoor space ($1,075,000) and an increase of 4 percent over the pre-Covid pricing.
Manhattan apartments with outdoor space were able to command higher prices even as the broader NYC sales market showed a decline in prices. For units without outdoor space, the post-lockdown median sales price was 2 percent less. Average price and price per square foot showed steeper declines of 7 and 8 percent, respectively.
“While prices dropped and discounts increased in the immediate aftermath following the resumption of in-person showings, homes with private outdoor space appreciated in value, and have continued to do so while the broader market has recovered,” Derderian says.
Similarly, Brooklyn condos and co-ops with outdoor space sold for more than units without. Prior to the lockdown, the median sales price of a Brooklyn apartment ($779,481) was 14 percent higher than a place without. In the post-lockdown period, these units appreciated more compared to units without outdoor space, but not by the same amount as Manhattan apartments.
The median sales price for a Brooklyn apartment with outdoor space following the lockdown was $950,000, representing a premium of 18 percent over places without outdoor space, and 22 percent compared to pre-lockdown pricing.
However, Derderian notes that the Brooklyn apartments without outdoor space also saw an increase in price during the pandemic (18 percent), thanks to strong demand for the borough in general.
How sellers can calculate the price of outdoor space
Derderian’s 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 without outdoor space. That represents a premium of 21 percent, and an increase of 3 percent over pre-lockdown pricing. (Averages tend to be skewed by prices for luxury properties).
Brooklyn apartments with outdoor space sold for $1,036 per square foot, compared to $995 per square foot for apartments without outdoor space, the premium here is smaller (4 percent) but it jumped 12 percent compared to pre-lockdown pricing.
Figuring out the value of outdoor space has never been a straightforward equation, but rather one that depends on several variables, like the value of the apartment it is attached to: A 500-square-foot terrace confers more value on a luxury apartment than on a less expensive apartment.
This 2010 blog post on understanding the value of Manhattan apartment outdoor space by Jonathan Miller, president and CEO of appraisal firm Miller Samuel, is his most popular, he noted on a recent webinar with UrbanDigs CEO Noah Rosenblatt and COO John Walkup that was moderated by Phil Horigan, founder of Leasebreak.com.
Miller’s general rule of thumb is that a terrace is worth 50 percent of the price per square foot of the interior space. So if the interior of an apartment is $1,000 per square foot, and the terrace is 500 square foot, the terrace could be worth $250,000, or $500 per square foot times 500 square feet, Miller writes.
During the webinar, Miller noted, you could have two terraces with the same total area but when one is a skinny, wrap-around terrace and the other is a rectangular—the first could add 25 cents for each dollar and the second 50 cents on the dollar.
This isn’t a formula, but a starting point for figuring out the value of outdoor space, he says.
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