In a sign of the times, an almost 1-million-square-foot Midtown office building has sold for a bonkers discount.
An enormous, half-block glass tower at 135 W. 50th St. — home of the 2022-opened Urban Hawker Singapore-style market on the ground level — was auctioned off for just $8.5 million on Wednesday. That’s a mind-boggling markdown from the $332 million its sellers purchased it for back in 2006, the New York Times reported.
Even remote work-weary developers and sales brokers well aware how badly working from home has impacted buildings’ values say that such a discount is unheard of — and couldn’t think of a similar one in recent memory.
Following failed attempts to offload the classic 1963-built behemoth — which, since COVID, has received a visible facelift in an apparent nod to lure in tenants — the structure’s owner, UBS, put it up for auction on a two-day real estate auction website called Ten-X. On Wednesday, it closed after receiving a single bid.
“What’s shocking is how fast the valuations dropped now that we’ve seemingly reached bottom, or close to it,” David Sturner, the son of the developer who sold the property in 2006, told the Times of the sale.
The building “certainly wasn’t the greatest asset we owned,” but was a “solid” property, he added, although today its woes are many.
Once the home to such companies as jewelry retailer Zales, the New York Telephone Company (Verizon’s predecessor) and Sports Illustrated, the 23-story goliath today sits 65% vacant, despite a pretty prime location across Sixth Avenue from Radio City. As well, the bad light from its mid-block address, relatively low ceilings and haphazardly located tenants make it a particularly bad contender for residential conversion.
And, most significantly, the building does not come with the land beneath it. That was sold by the seller to a company called Safehold for $285 million in 2019, the Real Deal reported, arguing that the land sale’s profits mean the building’s discounted sale should be considered much less of a loss.
But it was still most certainly a loss.
“UBS’s perspective was, ‘We need to sell this quick, we’ve kind of made peace with this is gonna be a big loss,” the auction website’s president, Steven Jacobs, said last month in an interview, according to the Real Deal. “We need to sell it and we need to move on.”
https://nypost.com/2024/08/02/real-estate/huge-midtown-office-building-sells-for-a-97-discount/
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