Manhattan CRE Sales Market Stalls As Buyers 'Keep The Pencil In Their Hand'

As fears of the unknown have arisen on both the local and national levels, would-be buyers of Manhattan commercial real estate hesitated to close deals in the second quarter.

Sixty commercial properties changed hands for a total of $1.7B, drops of 29% and 37%, respectively, from the first quarter, according to Avison Young data shared with Bisnow.

The total is a far cry from a strong first quarter, when 84 Manhattan properties traded totaling $2.7B. It was also the lowest dollar volume for any three-month period since the third quarter of 2023, according to Avison Young.

Among the most striking shifts is the drop-off in development site sales, which accounted for just 3% of all of the money changing hands across the five boroughs last quarter. Land deals made up 26% of the market in the first quarter, which was their highest share since 2018. 

That peak was a reflection of developers' excitement for the coming year. City of Yes, alongside other neighborhood rezonings and the implementation of new tax incentives, spurred a flurry of activity.

But the second quarter was defined by ever-changing tariffs and an unexpected primary election disrupting underwriting calculations. 

Those shocks still haven't killed any deals, just slowed the market, Avison Young principal and Head of U.S. Investment Sales James Nelson said.

“We haven't had a lot of developers say it was a reason that they were putting pencils down,” Nelson said. “It might be a reason for them to keep the pencil in their hand before finalizing their numbers.”

Avison Young principal and Senior Director of U.S. Investment Sales Erik Edeen added that there are eight sales over $100M and a total of $3.4B of deals under contract. The report only includes transactions that have closed.

“That really bodes well for where we see the statistics going in the second half of the year,” Edeen said.

The largest known pending sale is RXR’s $1.1B purchase of 590 Madison Ave. from State Teachers Retirement System of Ohio, which is expected to close by July 30, The Real Deal previously reported.

But those might not be enough to make up for a sluggish six-month start to the year. Avison Young projects $14.3B to be recorded this year across 662 transactions, far below New York City’s historical 10-year average of $28.4B across 778 deals.

“We think a lot of this muted investment sale activity over the last couple years is really just buyers and sellers sitting on the sidelines waiting for clarity,” Nelson said. 

That especially holds true for foreign buyers, which have accounted for just 11% of purchases in 2025 so far. They historically have accounted for between 20% and 40% of deals. 

End users have been responsible for more than 13% of sales, which would be the highest share since at least 2014 if the pace holds. But private investors are still the buyers on a majority of deals in the market, a sign of who thinks it's worth signing on the dotted line in turbulent times.

“You still have a lot of private investors, generational real estate families, that are seeing a basis that they haven't seen in years,” Avison Young principal and Head of New York City Investment Sales Brandon Polakoff said. “They're willing to take a bet [using] very low leverage and ride the wave of the recovery.”