Q4 2025 Market Report – Commercial Real Estate

The Quarterly / Q4 2025

The Year New York Came Back.

Office leasing closes 2025 at its highest annual total in six years.
Retail availability hits a record low. A new mayor arrives. The
market chooses momentum.

Published December 2025

NYC real estate values rose approximately 6%, with rental apartments leading the charge — and the city's Office-to-Rental Conversion (OTRC) initiative could deliver nearly 19,000 new residential units over the next eight years.

A New Horizon for NYC Property

New York City’s commercial and residential real estate markets entered 2025 with broader value gains than many expected. The total taxable assessed value across NYC rose 3.9% to $311.2 billion, with property owners now facing higher tax bills heading into FY 26. Single-family (Class 1) assessed value climbed 5.5% to $27.2 billion; multifamily and rental (Class 2) grew 4.8% to $120.7 billion.

Underneath that headline, the asset-class story split sharply: the office sector grew just 2.7% in total market value, while rental apartment market value rose 9.9% — a gap that confirms what every operator we work with has been seeing on the ground. Demand has shifted decisively toward residential. The city’s response: an aggressive Office-to-Rental Conversion (OTRC) program targeting nearly 19,000 new residential units over the next eight years, repurposing underutilized office stock at scale.

Brooklyn Leads Across Asset Classes

For the first time in recent memory, Brooklyn outpaced Manhattan across every Class 2 metric we track. Rental apartment values in Brooklyn rose 15.3% — the highest jump of any borough. Brooklyn’s commercial market followed, posting 6.3% market value growth and a 7.1% jump in assessed values. The trend confirms what tenants, operators, and capital have been telegraphing for two years: Brooklyn is no longer a discount play. It’s the primary growth story.

Institutional Capital Returns

Blackstone’s recent acquisition of a 50-story Manhattan office building — executed with Eastdil, RBC, Santander, and SMBC — signaled what we’d been hearing in private conversations through Q1: institutional appetite for premium NYC assets is back. The deal demonstrated two things at once: continued appetite for trophy multifamily even in a tough environment, and the kind of multi-bank syndication that only happens when the largest allocators see a floor under pricing.

— Key takeaways

NYC values rose ~6% overall, with the rental apartment sector alone up 9.9% — confirming where institutional and private capital is concentrating.
Brooklyn led every borough in Class 2 growth at 15.3%, outpacing Manhattan in both rental and commercial valuations.
Office-to-Rental Conversions represent a structural shift, not a one-off. ~19,000 units targeted in the next 8 years, with tax breaks and zoning incentives layered in.
Property tax bills are rising in FY 26 — total assessed value up 3.9%. Owners modeling forward operations should account for the lift.

— Sources

Avison Young (2024). Q4 2024 U.S. Office Market Overview.
Bisnow (January 2025). New York City Real Estate Valued at $1.56T.
CBRE (2023). Rise in Office Conversions May Help to Reinvigorate Cities.
New York Post (January 2025). New State and City Measures are Spurring Property Owners to Turn Obsolete Office Buildings into Modern Apartments.
Rosenberg & Estis (July 2024). NYC Budget 2024/2025 and Property Tax Updates.

The Year New York Came Back.

NYC real estate values rose approximately 6%, with rental apartments leading the charge — and the city's Office-to-Rental Conversion (OTRC) initiative could deliver nearly 19,000 new residential units over the next eight years.

A New Horizon for NYC Property

Brooklyn Leads Across Asset Classes

Institutional Capital Returns

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