The Manhattan commercial real estate sector faced a notable downturn in the second quarter of the year, as potential buyers exhibited hesitation amid rising uncertainty on both local and national fronts.
According to data from Avison Young shared with Bisnow, there were 60 commercial properties sold during this period, totaling $1.7 billion. This represents a substantial decline of 29% in the number of transactions and a 37% decrease in dollar volume from the first quarter.
In comparison, the first quarter demonstrated robust activity, with 84 Manhattan properties exchanging hands for a total of $2.7 billion. The second quarter’s total marks the lowest dollar volume for any three-month period since the third quarter of 2023.
One of the most significant changes noted in the second quarter was the sharp drop in development site sales, which accounted for merely 3% of all transactions in the five boroughs. This was a stark contrast to the first quarter, where land deals comprised 26% of the market—representing the highest share since 2018.
This earlier peak was fueled by a wave of optimism from developers in anticipation of favorable market conditions following initiatives like the City of Yes and several neighborhood rezonings, accompanied by new tax incentives that stimulated activity.
However, the second quarter was characterized by fluctuating tariffs and the impact of an unexpected primary election, which complicated underwriting calculations.
Despite these hurdles, no substantial deals have been disrupted, although many potential buyers have opted to slow down their activities. James Nelson, principal and Head of U.S. Investment Sales at Avison Young noted, “We haven’t had a lot of developers say it was a reason that they were putting pencils down. It might be a reason for them to keep the pencil in their hand before finalizing their numbers.”
Adding to the optimism, Avison Young’s principal and Senior Director of U.S. Investment Sales, Erik Edeen, pointed out that there are currently eight sales exceeding $100 million with a total of $3.4 billion worth of deals under contract. The report exclusively tracks completed transactions, yet such numbers may herald a rebound in the second half of the year.
Among the noteworthy pending transactions is RXR’s $1.1 billion acquisition of 590 Madison Ave. from the State Teachers Retirement System of Ohio, expected to close by July 30.
Despite some promising signs, the market’s sluggish start to the year raises concerns about future performance. Avison Young forecasts a total of $14.3 billion in sales across 662 transactions by the end of the year, significantly below New York City’s historical 10-year average of $28.4 billion through 778 deals.
Nelson commented on the current state of the market, suggesting that muted investment activity over the past couple of years could be attributed to buyers and sellers remaining on the sidelines in search of clarity.
A noticeable trend is the reduction of foreign buyers who have only accounted for 11% of purchases in 2025 thus far, compared to their historical involvement of 20% to 40% of deals.
On the other hand, end users have emerged as a more significant force in the market, representing over 13% of sales—their highest share since at least 2014 if this pace continues.
Nevertheless, private investors remain the predominant buyers, indicating confidence among certain groups amidst turbulent conditions.
Brandon Polakoff, another Avison Young principal and Head of New York City Investment Sales, remarked, “You still have a lot of private investors, generational real estate families, that are seeing a basis that they haven’t seen in years. They’re willing to take a bet [using] very low leverage and ride the wave of the recovery.”
image source from：bisnow
