Businesses are paying real big for space in the Big Apple.
Manhattan came in first among U.S. cities for commercial real estate price by square foot and volume according to data analysis by the business group Transwestern and the property research firm Real Capital Analytics.
The borough’s office space sold for an average of $770 per square foot, 40% more than Washington D.C., which had an average price of $548 per square foot.
Manhattan also led in volume with $11.2 billion, and had a $6.1 billion lead on Los Angeles according to the survey, which looked at data from the beginning of the year to July 31.
Michael Slattery, a senior vice president at the Real Estate Board of New York, said the market is driven in no small part by the fact that huge firms want to move to Manhattan.
“We do have a wealth of cultural institutions and entertainment opportunities so there is a broad range of appeal,” he said.
Researcher Palak Raval, who co-wrote the report, said Transwestern looked at only office properties that sold for at least $2.5 million this year and it is currently working on doing an analysis on 10-year trends for the cities.
Slattery said Manhattan’s commercial market has been rebounding since 2008 and there has been a boost in Midtown South.
“It seems as if it’s become a very desirable location, especially with the transformation of older buildings,” he said.
Although the report didn’t look at the retail sector of commercial real estate, Slattery said that area played a big part in this year’s uptick in office sales.
“If a segment of the market is doing well it spills over to other markets,” he said.
The city took the silver medal in one category, however, losing to Los Angeles when it came to the number of transactions. L.A. had 172 commercial transactions this year compared to Manhattan’s 107.
Slattery said he couldn’t explain why Los Angeles had an edge but predicted that New York’s market will continue to lead the way overall.
“The surge in employment is a good thing. Tech is showing a certain resurgence here, but the traditional businesses are doing well too,” he said.