Related Latest to Sell Office at Deep Discount

Discounts abound across the national office market, and not even the most prominent landlords are spared.

An affiliate of Related Companies is selling a property at 321 West 44th Street in Hell’s Kitchen for below $50 million, Bloomberg reported. The buyers — Namdar Realty Group and Empire Capital Holdings — are benefitting from a roughly 67 percent discount from the building’s last sale price, $153 million in 2018.

The transaction was a short sale, meaning Related and its lenders agreed to sell the property for less than what was outstanding on its mortgage. The balance on the loan is above $100 million.

The 10-story, 220,000-square-foot office building counts Battery Studios and AKA among its tenant roster.

A team from CBRE arranged the transaction. Related, Empire and CBRE declined to comment to Bloomberg, while Namdar did not return a request for comment.

The sale is just the latest example of how office values have dropped precipitously in recent years as high interest rates and the pandemic have taken a bite out of the sector. As maturities loom and costs surge, owners are finding it better to cut their losses at a discount rather than play out a distress scenario.

As for Namdar and Empire Capital, this is not their first joint venture in Manhattan’s office market. Last year, Empire acquired 529 Fifth Avenue for $107.5 million from Silverstein Properties; Namdar was part of the buyer group. Two years ago, the partners bought 830 Third Avenue, a 14-story Midtown building, for $72 million from AEW Capital Management.

A year earlier, the two joined forces to acquire 345 Seventh Avenue for about $107 million

Namdar’s leader, Igal Namdar, is known to gamble on struggling Class B and C malls in smaller cities throughout the United States. Namdar Realty Group owns and manages about 57 million square feet of commercial real estate across the country.

— Holden Walter-Warner