NYC’s most iconic buildings are plummeting in value and savvy investors are gobbling up the deals

New York City is for waste — and it’s going for bargain basement prices. Now, nan trading spree is spurring a purchaser feeding frenzy that moreover nan city’s astir iconic buildings won’t escape.

Most notably, nan landmarked Chrysler Building could soon waste for peanuts pinch its operators facing eviction.

In 2019, Aby Rosen’s RFR Holding shelled retired a specified $75.5 cardinal for nan Art Deco skyscraper.

Rosen hoped to return nan building to its glory days, possibly moreover converting immoderate of nan building into a hotel, and invested $150 million.

But nan bargain waste didn’t see nan building’s ground, which is owned by Cooper Union. In 2017, nan crushed rent was conscionable $7.8 million, but has grown to $32.5 cardinal (it will leap to $41 cardinal successful 2028).

That’s much than existent agency tenants salary successful rent and RFR owes nan schoolhouse complete $21 million. Now, Cooper Union is trying to terminate RFR’s lease and appointed Cushman & Wakefield to negociate nan building that is conscionable 60% occupied.

Savills is evaluating early options that will apt see a caller lease pinch a caller operator. Meanwhile, nan parties are now battling complete nan iconic skyscraper successful tribunal and declined comment.

Industry experts opportunity without a heavy trim successful rent, nary 1 tin spend to make nan improvements needed to woo caller agency tenants astatine higher rents. But Cooper Union is nether a consent decree for anterior fiscal mismanagement that ends this twelvemonth but requires it to chop expenses and reinstate free tuition and needs good complete $50 cardinal each twelvemonth to do so.

RFR isn’t nan only proprietor successful trouble.

Investor Charles Cohen besides stopped paying rent connected nan crushed lease, arsenic good arsenic spot taxes, connected nan curvaceous Tower 57 astatine 135 E. 57th St. and Lexington Avenue. He was intent connected converting nan agency building into a residential condominium, which is not permitted nether his crushed lease. Now, a authorities judge has fixed Cohen nan footwear and nan spot is being marketed pinch each offers considered by Andrew Scandalios of JLL. Meanwhile, Cohen’s lender, Fortress, is pursuing nan UCC waste of a group of his properties and a individual $187 cardinal guarantee for a $534 cardinal owe he stopped paying this year.

Across nan city, brokers opportunity that rent regulated residential buildings and older agency inventory that were erstwhile worth, say, $100 million, could now beryllium worthy arsenic small arsenic $30 cardinal to $50 million. And lenders are becoming fierce successful getting bad debts disconnected their books.

“There is simply a batch clearing retired for lenders and they want to move connected from these properties,” said Scandalios, who is handling nan waste of 135 E. 57th St. connected behalf of nan crushed owners.

“Owners of specified properties cannot refinance because they would person to travel up pinch nan quality successful rate to salary disconnected nan mortgage,” said Bob Knakal of BKREA. Instead, they’re handing complete nan keys — aliases battling successful court.

The declines successful values person astonished nan industry. The 930,000-square-foot crushed lease astatine nan erstwhile Sports Illustrated building astatine 135 W. 50th St. conscionable sold for $8.5 cardinal — its past tab was $332 million. The caller Texas-based owners will now undertake renovations to nan tune of immoderate $100 million, sources said.

In different example, Brookfield’s agency building astatine 1 Liberty St., erstwhile weighted astatine $1.5 billion, was precocious revalued to $1 cardinal erstwhile it obtained a $750 cardinal owe to upgrade its amenities.

For buyers looking for a imperishable location for their businesses, it’s nan opportunity of a lifetime. “We are seeing a batch of buy-side power and group want to deploy capital,” said Scandalios.

“User-buyers scope from manner and nationalist work organizations to auction houses and financial firms that want to power their ain destiny,” added Doug Middleton of CBRE. “It’s a spot of a herd mentality and they want to make judge they power nan beingness location successful a premier abstraction and will not get outbid successful nan future.”

One of those caller buyer-user transactions overseen by Middleton was nan acquisition of nan vacant, 69,000-square-foot, cast-iron building astatine 636 Sixth Ave. on Ladies’ Mile. The Hotel Trades and Hotel Association paid Nuveen and Union Investment $37.5 cardinal for nan unit area and paid Clarion $32 cardinal for nan 7 vacant agency floors.

To power its views and “campus” JPMorgan Chase is buying 250 Park Ave., an older agency building that sits adjacent to its caller building astatine 270 Park. “It was nan correct building for them to control,” said Darcy Stacom of Stacom CRE, who advised some nan slope and its improvement partner Hines.

However, nan buying frenzy is starting to buoy prices for immoderate owners. Over a twelvemonth ago, Stacom said buyers successful wide were offering $150 to $170 per ft but “nobody was trading astatine that pricing.”

Now, she said, buyers are consenting to salary $300 per foot. “That’s why you are getting truthful galore offers,” said Stacom, noting that buildings are getting 15 to 25 bids. Still, those prices are often a 3rd of nan original owner’s investment.

Well-positioned sellers astatine nan apical extremity of nan marketplace cognize their values will emergence and are waiting for pricing to improve, added Scandalios.

Meanwhile, immoderate buyers are targeting obsolescent agency buildings for residential and edifice conversions.

“It’s costly to return down buildings,” Stacom said, estimating costs of $35 to $75 a foot. “It tin adhd up to a lot. That is why they are trying to person nan existing structures.”

By making a pact pinch nan holders of a $500 cardinal mortgage, nan 1.2 million-square-foot agency building astatine 111 Wall St. will beryllium turned into 1,500 apartments by conversion guru Nathan Berman and InterVest Capital Partners.

Nearby, Vanbarton, which has converted different Fidi buildings, is successful statement to bargain 77 Water St. for $95 million, aliases $175 per foot. It’s being marketed by Eastdil Secured connected behalf of nan Kaufman family company, Sage, which developed it successful nan 1970s.

Vanbarton is besides readying nan residential conversion of 1011 First Ave. The Archdiocese of New York is trading nan agency building for $100 million, successful a woody brokered by Middleton, up of its move to 488 Madison Ave.

Also uptown, connected behalf of Morgan Stanley, a Newmark squad is trading an 11-story boutique agency building astatine 500 Park Ave. astatine 58th Street — primitively Pepsi’s 1960s headquarters.

The agency floors proceed nether nan guidelines of nan adjacent, 40-story residential condominium tower. Since nan offices are 95% leased, a caller proprietor could pine it up and adhd amenities for higher rents.

Adelaide Polsinelli of Compass calls each of this action “The Big Thaw.”

“The marketplace transitioned from hibernation to afloat throttle action,” she said. “People will transact for FOMO — fearfulness of missing out. We are astatine nan bottom, and this is nan champion clip to bargain successful 15 years.”