Empire Capital Holdings and Namdar Realty Group agreed to purchase the property at 321 W. 44th St. for less than $50 million, according to people familiar with the matter who asked not to be identified citing private information. That’d be a roughly 67% discount from the nearly $153 million that Related Fund Management paid for it in 2018. 

The deal was a short sale, meaning Related and its lenders including Canadian Imperial Bank of Commerce agreed to sell the property for less than the outstanding amount on the mortgage, the people said. The loan balance for the tower was more than $100 million, one of the people said. Short sales have become more common in the office sector as values have fallen below the loan amounts. 

The 10-story building in Manhattan’s Hell’s Kitchen neighborhood has roughly 220,000 square feet (20,400 square meters) of space. Tenants include Battery Studios and ad agency AKA.

Brokerage CBRE Group Inc. handled the sale. Spokespeople for Related, Empire and CBRE declined to comment. Representatives for Namdar and CIBC didn’t immediately return a request for comment.

Office properties across the US have seen valuations plummet as borrowing costs rose and demand wavered with the rise in remote work. While newly built or renovated towers have been able to attract tenants at strong rents, older buildings have struggled to fill space.

The market largely froze up over the past two years as lenders and owners struggled to agree on pricing, holding onto assets instead of being forced to sell at fire-sale prices. But looming maturities and rising costs are starting to push more owners to cut their losses. Banks, who often don’t want to take over managing office buildings, are also incentivized to work with landlords on deals to find buyers for the properties, including short sales. 

A few deals, including this transaction, have shed light on how investors are valuing the buildings. Other office buildings that have sold recently include 1740 Broadway, which Blackstone Inc. bought for $605 million in 2014. The private equity firm eventually wrote off its investment in the tower and agreed with its lender to sell the property for roughly $186 million this year. 

Empire Capital, which invests in commercial real estate on behalf of wealthy families, has been actively seeking deals in the recent property-market turmoil. The company bought 1200 Sixth Ave. and a stake in Mercedes House. The firm also teamed up with partners to purchase 1330 Sixth Ave. from Blackstone and developer RXR in 2022 for a steep discount.

Empire has also partnered with Namdar previously to purchase other office towers. The pair bought 830 Third Ave. in 2022.

Related Cos. continues to be a major office owner. The firm was a key developer behind Hudson Yards, which has attracted tenants such as Steve Cohen’s Point72 and Meta Platforms Inc., Facebook’s parent. Related founder Steve Ross is also betting big on offices in West Palm Beach, landing tenants such as Goldman Sachs Group Inc. since the start of the pandemic.