NEW YORK, NY – January 8, 2026 – New York City’s investment sales market showed renewed momentum in 2025, with total dollar volume hitting $33.5 billion, an 18% increase year-over-year, preliminary numbers released by Ariel Property Advisors show.

The growth in dollar volume was largely driven by the entity sale of Paramount to Rithm Capital, contributing $3.8 billion to the New York City Class A office sector, without which investment sales dollar volume would be in line with 2024.

"The 2025 data tells a story of a market where high-quality assets continue to command a premium," said Shimon Shkury, President and Founder of Ariel Property Advisors. "We are seeing a clear pivot toward growth in sectors like Class A office and rental development, fueled by landmark policy changes and improving fundamentals."

Office: A Tale of Two Tiers:
The office sector saw a staggering 111% year-over-year increase in dollar volume to $11.25 billion, driven primarily by large-scale transactions in Manhattan. Rithm Capital’s acquisition of the publicly traded REIT Paramount added eight Class A buildings valued at approximately $3.8 billion, marking the largest post-pandemic office deal to date.

      • Class A and Trophy Assets: Accounted for 85% of office sales, with pricing averaging $801/SF, up 17% year-over-year.
      • Class B/C: While representing 75% of the transaction count but only 15% of the dollar volume, these assets focused on enhanced "value optionality."

Multifamily and Affordable Housing
Multifamily dollar volume declined 9% to $8.2 billion, while transactions rose 5% to 1,203.

      • Free Market: This asset class accounted for 68% of multifamily dollar volume and 48% of transactions, driven by Manhattan and Brooklyn, which together represented 94% of sales volume. Manhattan pricing averaged $858/SF, up 6% year-over-year but still 18% below peak.
      • Rent-Stabilized: These assets continued to face pressure, with dollar volume down 27% year-over year. Average pricing declines since HSTPA have been most severe in Manhattan (down 54%), followed by Northern Manhattan (down 53%), the Bronx (down 52%), Queens (down 40%), and Brooklyn (down 25%), with select trades at 70%–90% discounts. Operating costs, including insurance, which has grown exponentially in higher-risk locations, have jumped by 54% over the last decade while rent growth approved by the RGB has only risen by 16%.
      • Affordable Housing: Sales were in line with 2024, representing 9% of the multifamily dollar volume and 4% of transactions, supported by strong investor demand amid limited supply. Activity remains constrained due to the pause of the Private Housing Finance Law Amendment 610 and HPD staffing shortfalls, though the LIHTC bond threshold change is expected to support new mixed-income development.

Development and Conversions
Development sales rose 11% to $6.2 billion and transactions increased by 17% to 393.

      • Ground-Up Development: While the $800 million sale of 800 Fifth Avenue was the most significant transaction, rental sites represented 63% of all ground-up development trades, supported by the expanded buildable area under the City of Yes and the 485x and vested 421a tax incentives. These rental development trades increased 38% year-over-year, driven primarily by smaller sites, typically for projects of 99 units or fewer, as 485-x wage mandates continue to constrain larger-scale projects.
      • Office Conversions & Demolitions: Office conversion and demolition sales totaled approximately $1.3 billion in 2025, down roughly 46% from $2.4 billion in 2024, reflecting a shift toward owner-led conversions rather than diminished conviction. Some of these owners include GFP, TPG, Vanbarton, SL Green, RXR, Apollo, and Rudin. Conversion activity accelerated despite lower sales volume, with 4.3 million SF commencing construction in the 11 months through December, up nearly 60% year-over-year, and an additional 9.5 million SF expected to break ground in 2026, according to Cushman & Wakefield. Activity remains concentrated in Manhattan, supported by the 467-m tax abatement, expanded eligibility through the City of Yes and the Midtown South rezoning.

Retail, Hotel, and Industrial

      • Retail: Sales increased 3% year-over-year to $3.6 billion, while transactions fell 3% to 248. Availability hit a 10-year low of 12.5%. High-profile deals like IKEA’s $213 million purchase of 529 Broadway highlighted the continued demand for prime corridors.
      • Hotel: Despite a 12% dip in sales to $1.69 billion, operating fundamentals were stellar. Occupancy reached 88% and RevPAR outperformed national trends, bolstered by limited new supply and regulatory restrictions.
      • Industrial: Institutional activity dropped by 39% to $1.23 billion, its lowest dollar volume since 2014 as the market shifted toward smaller owner-user acquisitions and self-storage.

Outlook

The market enters 2026 facing a mix of headwinds and tailwinds. Concerns include geopolitical conflicts and tariffs and the incoming Zohran Mamdani administration’s proposed rent freeze. Offsetting these headwinds, New York City’s fundamentals remain strong, supported by sustained demand across Class A office, free market and affordable housing, and well-located retail, a deep luxury market and a pro-development policy legacy from the outgoing Eric Adams administration anchored by City of Yes and major passed and in-progress rezonings.

To review the NYC 2025 Year-End Commercial Real Estate Trends Report, please click here.