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nearly 1 million-square-foot Manhattan office building at 135 West 50th Street has been sold on the online auction site Ten-X for $8.5 million, a staggering 97% less than its original purchase price of $332.5 million in 2006 by Swiss bank UBS. The sale was completed after a two-day auction that kicked off with a starting bid of $7.5 million and ended when the reserve price was lowered. The building's ground lease, which was sold to Safehold in 2019 for $285 million, still has 104 years remaining on it.

    The loss on the property was partially offset by a $6 million gain from buying and selling the ground beneath it. UBS had listed the 920,000-square-foot building with JLL on Ten-X, an unusual platform for such a large asset. The winning bidder's identity remains unknown. The sale may be a sign that major institutions are struggling to maintain value in aging buildings with low occupancy rates.

    Ground leases have been particularly hard hit since the pandemic, as empty offices have led to reduced revenue and increased debt service payments. Haynes Boone attorney Brett Dockwell notes that some building owners may try to renegotiate ground rent but ultimately face termination of the lease and loss of control over the property. Others may be forced into fire sales like the one on Ten-X.

    The new owner of the Midtown tower may choose to convert it to residences or tear it down and build anew, as the $800,000 monthly payments from UBS's remaining lease will now become their responsibility. The sale highlights the challenges faced by property owners in a city with a glut of similar properties and struggling office market.