NYC Office Tower Sells for $1

The office market in NYC is crashing.

That’s due to the popularity of “work from home.” And employees refusing to come back to the office.

Office vacancies hit a record high of 20% in January.

That’s due to companies closing offices or downsizing their office footprint.

Here’s the latest example…

A midtown Manhattan office building selling for $1.

No joke.

In 2021 Boston Properties bought an office building in NYC.

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The property is at 360 Park Avenue South.

It’s a 450,000 square foot 20-story building.

Office Tower Deal for $1 Reveals Anxiety Among Longtime Buyers - Bloomberg

Boston Properties paid $300 million for the building. And they planned to invest $100 million upgrading the property.

Quebec’s public pension plan bought a 29% stake. And they invested a total of $71 million in the project.

Fast forward to late 2023…

82% of the offices are unoccupied.

Quebec sold its stake in the property for just $1.

Boston Properties will assume the debt and all expenses on the property.

The deal basically lets Quebec take a loss on its investment. And walk away with no future commitments.

Here’s why this is important…

Commercial office space is a huge market.

These buildings are funded with loans from U.S. banks.

Many of these buildings have seen their values drop by 30% – 50%.

One big risk is that owners are walking away from their properties. And the banks will be left holding the bag.

This is one risk to the economy and market that I’m watching closely.

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