Valuing Outdoor Space in New York City
Our clients weighing a list price or a purchase offer often ask how to value private outdoor space in New York City.
Roughly 10% of co-ops and condos sold last year had exclusive outdoor space. Based on these sales, we can make some conclusions.
First, not all spaces are alike, and value depends on relative appeal, privacy and scarcity. For example, balconies on the Upper East Side don’t accrue much value. They are plentiful among its post-war buildings.
On the contrary, private terraces with views at a downtown loft can be worth a lot.
As a guide, outdoor space is valued at 25% to 50% of the price per the property’s interior square footage.
A high-floor, 2-bed TriBeCa condo loft, priced at $2000/ft., with a unique, 700 square-foot private terrace with views, irrigation and privacy, may command $1000/ft. (50%) for it’s outdoor space, adding $700,000 to total value.
That said, if the terrace grew to twice as large, the threshold of “wasted space” would be crossed at a certain point, with outdoor price-per-foot decreasing toward 25% of interior as you cross it.
Further, if the next six new TriBeCa condos introduced 40 similar terraces, the outdoor price-per-foot for this terrace would decrease further.
A final important factor is that there is always a cap on how much the market will pay for a particular bedroom configuration, regardless of the size of outdoor space.
This should be kept in mind when assessing value for an offer on a property with a terrace or balcony so one doesn’t overpay.