Is Half Off a New York Skyscraper a True Deal?
Last week the media reported that a NYC skyscraper sold for about $600 million, and according to Real Capital Analytics the prior purchase price was $1.74 billion. The property has 1.8 million gross square feet, 1.6 million rentable square feet, and is 50% vacant. At first glance, a 65% reduction may seem like a steal, but a closer look reveals the true reasons behind the urgent need to sell. When such desperate measures are taken, the only logical conclusion is that there must be a reason. And that reason is what investors must investigate before succumbing to the lure of initial savings. Rent prices are dropping and unoccupied units are becoming more difficult to fill. This holds true across the country, even in New York, so the fact that the building has only half of its rental space occupied means that the property is not producing a profit. Many believe that buying real estate outright will guarantee revenue generation, but in this case the expenses are greater than the income. A
