According to an employment report released by ADP, 230,000 non-farm private sector jobs were added in the US in September. In New York City the number of employed New Yorkers hit a new high of 4,049,200 according to the last quarterly analysis by city comptroller Scott Stringer.

Despite this positive benchmark for the city, only 1,200 new office-using jobs were added in the second quarter of 2018 which is the lowest quarterly increase since late 2009.

Although the increase in office using jobs appears to be slowing down in NYC, boutique office investment market sentiment has remained positive thus far in 2018.

Boutique Office Market thus far in 2018 – By Neighborhood

In Midtown, there have been three boutique office transactions in the first half of 2018 totaling $138.9 million in dollar volume.  This was a 13.1 percent increase from the $122.8 million in the first half of 2017; but a decrease in transactions from five (decrease of 40 percent) in the first half of 2017.

In January, Bashi Rafael LLC purchased a six- story property in Kips Bay for $636 psf. In April, a 87,000 s/f office building located at 9 East 40th Street sold for $809 psf. The most recent boutique office sale was a purchase by a user: Vida Shoes International purchased a boutique office property for their headquarters at 26 West 56 Street for $1,225 psf. The last time a user paid for a boutique office property in central midtown was in 2017 when WanXin Media led by Bi Yan Li purchased 15-17 West 44 Street for $1,286 per square foot.

The Downtown boutique office market in the first half of 2018 had some large trades, with dollar volume topping $141 million. This was a 48.8 percent increase from $94.74 million in total for 2017. Transactions in the first half of 2018 for boutique office properties went down from eight in first half of 2017 to three. This is due to the fact that four of the transactions were purchases of interest in buildings from owners who already had partial equity in the building.

K-property led the way in 2018 with two major transactions in SoHo. One in January for two contiguous buildings at 30 & 32 Howard Street for $50 million at $1,650 psf. Then another purchase of 446 Broadway in August for $47  million at roughly $1,730 psf. Recently, Caspi Development sold two boutique office buildings in the Lower east side totaling 33,787 s/f for $48.25 million which comes out to $1,430 psf. Average price per square foot in downtown thus far in 2018 has been $1,603.74 which is a 10% increase from $1,451.10 per square foot in 2017.

Upper Manhattan, on the other hand ,has only seen one office trade this year. In the past, Harlem has seem some surprisingly large office building trades on 125th street by the subway stops for the A,C,B,D trains. This year, Gatsby Enterprises purchased an office property on 125th street next to the 2,3 train subway stop. The sale was just shy of $780 psf and was delivered vacant. The previous owner was Carver Federal Savings Bank.

Nearly every office trade in the past two years in Upper Manhattan has been office properties near subway stops in strong retail corridors. The average price per square foot of these trades come out to be $703 a foot. Office rents in this neighborhood average between $35-$45 psf.

The Upper East Side (UES) boutique office market is unique. Historic townhouses in Lenox Hill, once home to famous businessmen and industrialists of the 1800 and 1900’s, are now being converted into offices for medical practices or company headquarters. Office rents in the upper east side for townhouse office space average between $70-$80 psf. In the past two years, values for these large and elegant townhomes converted to offices have appreciated substantially as some of the world’s wealthiest individuals have been purchasing these to convert them for their own personal use.

This past February HNA sold a townhouse office building to billionaire Len Blavatnik for $90 million – a 13 percent appreciation for HNA only 10 months after buying it for $79 million in 2017.

Two of the three boutique office trades in the UES in 2018 thus far were townhouse office properties bought by users. The average price per square foot for townhouse office properties rose 4.64 percent from 2017 to $3,233 psf.

Looking forward, there is a growing sense of competition between major boutique office tenants, especially tech, fashion, and media companies vying for the best talent in a job market where perks make or break the job acceptance decision.

Better spaces with better amenities catered towards these companies and their employees is a bonus that these firms, usually flush with funding, will gladly pay for.

The year-over-year rising rents for boutique office space across the Manhattan submarkets are clear evidence of this, and the trend is poised to continue into the foreseeable future.