Hudson Yards, Midtown South and Outer Boroughs Leading Growth
Office buildings in New York City remain a critical contributor to its economy and tax base, as market values reached nearly $205 billion in fiscal year (FY) 2025, surpassing pre-pandemic levels, according to a report released today by New York State Comptroller Thomas P. DiNapoli. These higher market values are being fueled by growth outside of traditional Midtown office districts, including Hudson Yards, Chelsea, Union Square, Soho, Downtown Brooklyn and Long Island City.
“The value of office buildings in New York City is tied to demand for space that comes from new and expanding businesses hiring workers,” DiNapoli said. “Demand for space in new, amenity-rich buildings in and around Hudson Yards, along with the firm growth around Union Square, the Village and business districts in the outer boroughs have helped increase market values, which ultimately will remain a key contributor to the city’s tax rolls.”
Total office market values grew over 4% ($8.7 billion) since FY 2020, driven by newer office buildings built after 2010. Based on how the city assesses buildings, increased market values do not necessarily result in higher taxable income for the city. However, the portion of the assessed value on which property tax bills are based went from $66.9 billion in FY 2020 to $71.6 billion in FY 2025, faster than the rate (7%) for market values. If the pandemic had not interrupted market value growth, OSC estimates that the total taxable value for city office buildings could have reached $90.6 billion for FY 2025, meaning the property tax levy would have provided $6.2 billion in additional tax revenue since FY 2022.
New York City’s office buildings are concentrated in Manhattan below 59th street, which still makes up nearly 90% of office market values. However, major office districts in this area, including parts of Midtown East, are still more than 10% below their pre-pandemic market values. The area including Hudson Yards, Chelsea and Koreatown saw the largest growth in market value (56%) among the top 20 office zip codes in the city fueled by Hudson Yards and neighboring buildings. By FY 2025, development of newer office buildings in these areas drove market values up as they generally have more amenities.
Other areas in Manhattan that experienced relatively strong market value growth tended not to be in the city’s major office districts of Midtown East, Midtown West or the Financial District. Instead, areas in and around Union Square and Soho saw double-digit market growth in FY 2025 compared to FY 2020. Market value growth in the outer boroughs reached double digits in Downtown Brooklyn and Long Island City, which have also experienced substantial growth in the number of office-sector businesses. Office buildings in the South and Central Bronx, Northern and Southwestern Brooklyn and along the 7 subway and LIRR train lines in Queens also saw values rise. Office space use by businesses in the information, financial activities, and professional and business services sectors increased in many of these areas.
The city’s historic business districts will face a longer road to recovery if office occupancy rates do not improve. The citywide peak-day occupancy rate was 64.2% as of July, according to Kastle Systems, which remains well below pre-pandemic levels. In addition, the age and quality of buildings in these districts pose challenges for their market value growth, which may make them more amenable for conversion to housing.
Despite some buildings facing declines in value, the city’s overall property tax base from office properties is likely to remain resilient. Ultimately, the city’s office real estate market will continue to evolve, with the fate of the market remaining closely tied to the business environment and talent pool in the city. The city’s budget will continue to benefit from an outsized contribution from office property taxes. Additionally, future anticipated interest rate cuts should enable investors to pursue new investment opportunities.
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