23-Floor Manhattan Office Building Just Sold at a 97.5% Discount
The 23-story Manhattan office building sold for $8.5 million, a 97.5% drop from its 2006 price, highlighting the pandemic's impact on office demand and ongoing market struggles.
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The 23-story office building at 135 West 50th Street in 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, where many properties have seen steep declines in value. The sale occurred through an online auction after previous attempts to sell the building for under $50 million failed. The new owner faces challenges, as the building's rental income does not cover the lease payments for the land, which is owned separately. Renovations or conversions to residential use are potential options, but both come with high costs and logistical hurdles. The building, constructed in the 1960s, has been home to various major companies but now suffers from outdated features and a less desirable location. The sale highlights the ongoing struggles of Manhattan's office sector as companies adapt to hybrid work models, leading to increased vacancies and diminished demand for traditional office spaces.
- The Manhattan office building sold for $8.5 million, down from $332 million in 2006.
- The building is only 35% occupied, reflecting the pandemic's impact on office space demand.
- The new owner faces financial challenges due to insufficient rental income to cover land lease payments.
- Renovation or conversion to residential use are potential but costly options for the new owner.
- The sale underscores the broader struggles of New York City's office market amid changing work patterns.
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12 commentsI've seen previous ~90% valuation declines but based on sales far more recent.
Chicago, 90% decline 2013 -- 2024: <https://www.chicagobusiness.com/commercial-real-estate/offic...>
San Francisco, 90% decline 2016 -- 2024: <https://sfist.com/2024/04/23/empty-office-building-at-sixth-...>
The impact of a 90% devaluation of the CMB (commercial mortgage-backed) securities market will have an immense impact on bank and investor balance sheets, which brings to mind the 2007-8 residential real estate crash and financial crisis.
Total present commercial mortgage valuation is about $3.6 trillion if I'm reading things correctly:
Unsurprising that a building's value goes down over time while the land on which it resides appreciates. The 97% discount is a comparison of the building price versus the building + land price, so the 97% isn't very relevant.
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