Why Wealthy Families Are Snapping Up N.Y.C.’s Empty Office Buildings


New York City is awash with bargain shoppers right now—and it’s not just people perusing for knockoff designer bags on Canal Street. They’re buying skyscrapers.

Wealthy families and lesser-known investors are scooping up Manhattan commercial real estate as they pounce on deals that can be found in the wake of the pandemic, according to a new report by Bloomberg. That’s because record high office vacancies in the city—94 million square feet are available for lease—and rising interest rates have left cash-strapped building owners looking to sell.

Manhattan office space has decreased 26 percent in value since 2017, according to MSCI Real Assets. To outsiders—especially family offices that manage money for the wealthy—this is looking like a real deal. “You start to get buy-in from people who aren’t mired with the vagaries of the local market, and are just saying ‘Wow, New York is cheap right now, I’ll buy,” Will Silverman, the managing director at the brokerage Eastdil Secured told Bloomberg. “They don’t have to rationalize anything to an investment committee. They just have to be convinced that it’s the smart thing to do.”

Of the 11 buildings sold in the last six months of 2022, big institutional investors uncharacteristically accounted for fewer than half the transactions. For instance, a group of family-run businesses in November teamed up to to buy 1330 Sixth Avenue from Blackstone, Inc. and real estate firm RXR for $320 million, which was $80 million less than what the company spent on it in 2010. And a wealthy Quebec businessman Carlo Bellini co-founded a group to buy AIG’s former corporate headquarters.

Developers who have remained are trying to lure office workers back to the city, with some of them turning to celebrity chefs like Daniel Boulud in the hopes that better food will entice people to leave the home office. And the massive overhaul of Rockefeller Center is similarly hoping to get people back to Midtown, but it’s still too early to see if all that investment will pay off.

While some are resigned that this downturn in the city’s commercial real estate market is more enduring that past lulls because of the embrace of remote work, others hope there’s a longterm win to be had like fortuitous investors of the past. Metro Loft founder Nathan Berman jumped on the chance to purchase New York real estate in the 1990s when the city was being hit with a similar vacancy issue. He bought a Tribeca office for just over $5 million and sold it for $85 million a decade later.

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