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ew York City's real estate market has hit rock bottom, with iconic buildings like the Chrysler Building up for grabs at bargain prices. The landmarked skyscraper could soon sell for a fraction of its worth after its operator, Aby Rosen's RFR Holding, faced eviction due to unpaid rent and property taxes.
Rosen had invested $150 million in the Art Deco building, hoping to restore it to its former glory and potentially convert some space into a hotel. However, the sale didn't include the ground lease, which is owned by Cooper Union. The school has since increased the rent from $7.8 million in 2017 to $32.5 million this year, with plans to reach $41 million in 2028.
Industry experts say that without a significant reduction in rent, no one can afford to make the necessary improvements to attract new office tenants at higher rents. Cooper Union is under pressure to cut expenses and reinstate free tuition, requiring over $50 million annually.
Other building owners are also facing financial struggles. Charles Cohen's Tower 57 at 135 E. 57th St. has been kicked out of its ground lease after he stopped paying rent and property taxes. The property is now being marketed for sale with all offers considered.
Across the city, brokers report that rent-regulated residential buildings and older office inventory are selling for significantly lower prices than their worth. Lenders are becoming aggressive in offloading bad debts, leading to a buying frenzy among investors.
"This is the best time to buy in 15 years," said Adelaide Polsinelli of Compass. "The market has transitioned from hibernation to full throttle action, and people will transact for fear of missing out."
Buyers are targeting obsolescent office buildings for residential and hotel conversions, which can be more cost-effective than demolishing and rebuilding. For example, the 1.2 million-square-foot office building at 111 Wall St. is being converted into 1,500 apartments.
Meanwhile, some buyers are looking to control their own destiny by purchasing prime spaces in desirable locations. JPMorgan Chase is buying an older office building at 250 Park Ave. to protect its views next door at 270 Park.
As the market continues to thaw, prices for some owners are starting to rise. Buyers are willing to pay $300 per foot, up from $150-$170 per foot a year ago. However, those prices are still often a third of the original owner's investment.
Well-positioned sellers are waiting for pricing to improve, while others are targeting obsolescent office buildings for conversions. By making a pact with lenders and investors, buyers can secure prime locations at discounted prices, making it an exciting time for real estate in New York City.
