Everyone knows having outdoor space is not only luxury in New York City, it’s valuable!
But, just how valuable is it? This depends on the size, kind, and shape of the space. Let’s take a look.
Outdoor space is not valued the same as indoor space
First of all, outdoor space is not worth the same amount as indoor space. It might be different in the tropics, but in New York City nobody is hanging out on their terrace in January. Or February. Or December for that matter.
The rule of thumb is that outdoor space is worth between 25% and 50% of indoor space. So, while outdoor space will add value to a home, it’s not apples to apples compared to your indoor square footage.
The four types of outdoor space
There are typically four types of outdoor space that you’ll find in an apartment building. Here’s an example from one building:
A balcony will hang off the side of a building. They tend to be small, and are not worth much. Assign them an adjustment value of 25%.
2. Low floor patios
Low floor patios are better than balconies because they tend to be usable square spaces. But they are hampered by floating trash and noise, everybody is looking down on you and they tend to be darker. We might give an adjustment value of 30-35%.
3. Setback terraces
These are considered the best, especially when they are square shaped and are off of the kitchen/dining area of the apartment. Usually we assign a 50% adjustment value to setback terraces.
4. Private roofs
Private roofs are great, but they do not offer a nice flow from the rest of the apartment. If you are entertaining, you have to carry stuff up there. And you can’t see your gorgeous landscaping from your living room as you can in the setback terrace situation. So, we would assign an adjustment value of 40% to a private roof.
Other factors of an outdoor space that increase price
Once you start with the type of outdoor space, now we would look at the quality of the space.
If the space is mint, meaning it is beautifully landscaped and has a particularly charming disposition, then we might bump the adjustment value by 5% or 10%.
If the space is weirdly shaped (long and narrow as opposed to square), or has some other undesirable element (large noisy air handler or very dark) then I might subtract 5 or 10%.
Lastly, you should only give credit for up to 50% of the size of the indoor space.
Here is a practical example.
Building $/sf for high floor and similar renovation: $1500
Apartment size: 2,000 sf
Outdoor space size: 400 sf
Outdoor space type: setback terrace, nice shape, good renovation, off the living/dining area
Adjustment value: 50%
Price of apartment (before other adjustments) =$1,500*2000 + $1,500*(400*0.5) = $3,000,000 + $300,000 = $3,300,000.
Do you have an outdoor space and not sure what value it adds to your home? Give us a call, we’re happy to take a look and share our viewpoint with you!