🚨NYC's Harding Building sold for $105M, a 60% discount from its 2019 value, reflecting severe post-pandemic depreciation in office real estate. Despite a 95% occupancy rate, older offices like this face declining values due to higher cap rates and reduced investor interest. Additionally, 2023 distressed sales set record discounts, revealing a broader re-evaluation of office property values
Harding Building Sale Price: $105M (60% below 2019).
Manhattan Office Value Drop: 20% since early 2020
- Office Loan Delinquency: 11.7%
Loan Performance: Increasing delinquencies with a heightened risk of distressed sales as office values drop sharply. Debt service coverage ratios are under pressure, especially for older assets with weak NOI.
Demand Dynamics: High vacancy rates amidst remote work trends challenge absorption, with tenants favoring newer, amenitized Class A properties. Concessions and flexible leasing are necessary for older buildings.
Asset Strategies: Owners should pivot towards adaptive reuse or significant upgrades to retain tenants. Capital expenditure needs to focus on amenities and space modernization.
Capital Markets: A difficult funding environment, with regional banks pulling back and higher cap rate expectations. CMBS markets exhibit high caution with limited liquidity for aging office assets.
Rates/growth short line: Office values dropped ~20% post-pandemic.
Favored assets vs rent-beta: Class A office retains value better.
Financing stance: Elevated cap rates; conservative underwriting essential.
Spreads/structure caveat: Distressed sales set new, lower pricing benchmarks.
🛠 Operator’s Lens
Refi: Stabilized offices need refinancing strategies, focusing on prepay flexibility and interest reserves.
Value-Add: Prioritize capex to enhance asset competitiveness, including adaptive reuse where feasible.
Development: Consider pro forma adjustments to reflect current market realities.
Lender POV: Banks requiring conservative valuations and reserving more equity on older office deals.
Refinancing Crunch: Looming loan maturities in 2024–2025 may trigger further sales or defaults.
Policy & Conversions: NYC may offer incentives for office conversions, potentially easing supply.
Demand Signals: Office attendance trends closely linked to employers' return-to-office policies.
-CoStar — Harding Building Sale Report (September 2025). Wealth Management — Manhattan Office Value Drop Report (2025). Reuters — Midtown Office Sales Analysis (2023-2025). Cushman & Wakefield — Manhattan Office MarketBeat (Q2 2025).
