https://www.nytimes.com/2024/08/01/n...g-auction.html
An Office Tower Sold for $8.5 Million. It Was Once Worth 40 Times That.
The sale price of 135 West 50th Street in Midtown, which is only 35 percent full, was a sign of how much the pandemic upended the market for office buildings in New York City.
By Matthew Haag
Aug. 1, 2024
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In 2006, the hulking office building at 135 West 50th Street in Midtown Manhattan sold for $332 million. Tenants occupied nearly every floor; offices were in demand; real estate was booming.
On Wednesday, it changed hands again, in an unusual online auction — for $8.5 million.
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David Sturner, a developer whose father’s firm owned the building before selling it in 2006, was stunned by the final price.
The building, he said, “certainly wasn’t the greatest asset we owned” but was a “solid” property. “What’s shocking is how fast the valuations dropped now that we’ve seemingly reached bottom, or close to it,” he added.
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In many ways, 135 West 50th represents the myriad nondescript office towers that line Manhattan’s streets. Built in 1963, the building stretches about half a block and has been occupied by major companies like the New York Telephone Company (which later became Verizon) and Zales, the jewelry retailer.
For decades, buildings like it have made up the backbone of Manhattan’s booming office sector. But today, they have lost their appeal and their value.
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The auction for 135 West 50th opened earlier this week with a starting bid of $7.5 million. On Wednesday, with seconds left and only a single bid of $8.5 million, a gray box that read “reserve not met,” referring to the seller’s minimum price, suddenly turned green and changed to “reserve met” after that price was lowered. According to Ten-X, the reserve price is generally set at around three times the starting price.
As the clock ticked down to zero, the auction was extended — three times — for a total of 10 minutes and 30 seconds. The auction finally ended with a sale price that was about 2.5 percent of what the sellers had paid for it.
UBS Realty Investors declined to comment for this article. The identity of the new owner will be announced after the sale officially closes, which could take about 45 days.
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The buyer faces an immediate financial challenge: The auction was for the building itself, not the land. That is owned by a publicly traded real estate firm, which collects a monthly lease. But the rent from the building’s current tenants is not enough to cover those monthly payments, which are set to increase every five years and do not expire until 2123.
135 West 50th has more than 920,000 square feet but is just 35 percent occupied with office tenants, down from about 40 percent a year ago. It is one of the least occupied large buildings in Manhattan.
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“It’s a huge risk,” Mr. Knakal said, adding that the new owner might have to renovate and upgrade swaths of the building, at a cost of about $200 to $300 per square foot, to attract new tenants.
The new owner could also opt to convert 135 West 50th into residences or bulldoze it altogether to build something new. But each choice is challenging or expensive.
Razing the building and constructing an entirely new one would cost, at least, hundreds of millions of dollars.
While elected officials have encouraged developers to transform many older Manhattan office buildings into apartments or condominiums, very few transformations have moved forward, largely because of the high cost. Likewise, a large-scale change at 135 West 50th Street might be unlikely.
Mr. Sturner pointed to multiple issues that limited the building’s potential for conversion into residences: 10-foot-tall ceilings, which are short by today’s standards; large, inconsistently placed columns; inadequate light from its mid-block location; and existing office tenants scattered throughout the building who would need to be relocated to free up contiguous space.
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135 West 50th rose in the early 1960s during an office construction boom that reshaped Manhattan’s skyline and economy. Designed by one of the architects of the original World Trade Center, the building opened in the heart of Midtown between Sixth and Seventh Avenues, replacing the palatial Roxy Theater, once the largest cinemas in the world.
It stretches 23 stories tall with an aluminum-and-glass facade. Over the years, it has housed accounting groups, law firms and many employees of Time Inc., which leased several floors there because of its proximity to the former Time & Life Building on Sixth Avenue.
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About 15 years ago, Sheryl Hilliard Tucker, a former editor at Time Inc., toured the building when she was overseeing Money magazine and looking for new offices. Almost immediately, she said, she felt that the space lacked the right vibe for editors and writers.
“My first impression was, Oh, my goodness, we have moved back to the 1950s in an insurance building in the Midwest,” Ms. Tucker said.
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At the Ten-X offices in Irvine, Calif., dozens of auctions are monitored by agents in real-time.Credit...Ryan Young for The New York Times
Meanwhile, neighboring buildings are doing well, like this one just across the street...
https://www.costar.com/article/20066...deal-this-year
Law Firm Sparks New York’s Second-Biggest Office Deal This Year
Willkie Farr & Gallagher To Stay at Midtown Manhattan Tower
By Andria Cheng
July 29, 2024
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Century-plus-old law firm Willkie Farr & Gallagher has decided to stay put in its longtime home near Times Square in a renewal deal that CoStar data shows is the second-largest office transaction in New York this year.
Willkie, founded in 1888, signed a 20-year lease spanning about 315,000 square feet at 787 Seventh Ave. between 51st and 52nd streets, the law firm said Friday in a statement, adding it will begin a “full-scale” renovation. Willkie said it has over 600 attorneys at the 50-story, 1.8 million-square-foot office tower.
“Midtown Manhattan continues to be one of the most vibrant, convenient and accessible locations in New York City,” New York Office Managing Partner Rosalind Fahey Kruse said in the statement. The space overhaul will be designed with a “collaborative culture in mind,” she said.
Sidley Austin, also a law firm, is the largest tenant in the building with 344,000 square feet occupied, CoStar data shows.
In the largest office transaction in New York so far this year, Bloomberg renewed its agreement for 946,815 square feet at 731 Lexington Ave. after it was set to expire in 2029, building owner and real estate investment trust Alexander’s said in May. Developer Vornado Realty Trust, the property's developer and manager, owns a 32.4% stake in Alexander’s.
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NEW YORK is Back!
“Office buildings are our factories – whether for tech, creative or traditional industries we must continue to grow our modern factories to create new jobs,” said United States Senator Chuck Schumer.
Last edited by NYguy; Aug 1, 2024 at 12:24 PM.
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