23-Floor Manhattan Office Building Just Sold at a 97.5% Discount

The 23-floor office building at 135 West 50th Street in Midtown Manhattan has been sold for $8.5 million, a staggering 97.5% discount from its 2006 sale price of $332 million. The building, which is currently only 35% occupied, reflects the significant impact of the pandemic on New York City's office market. The previous owner, UBS Realty Investors, had attempted to sell the property for under $50 million before resorting to an online auction. The auction began with a starting bid of $7.5 million and concluded with a final bid that met the seller's reserve price after several extensions.

The building, constructed in 1963, has housed various major companies but has lost its appeal due to changing work patterns, with many companies adopting hybrid and remote work models. The new owner faces challenges, as the auction only included the building and not the land, which is leased from a publicly traded firm. Current rental income does not cover the lease payments, which are set to increase every five years until 2123.

Potential options for the new owner include renovating the building, converting it into residential units, or demolishing it to build anew, though each option presents significant financial hurdles. The building's outdated design and location further complicate its future viability in a market with an oversupply of office space.