Namdar Realty Group is making a contrarian bet on old Manhattan office buildings worth keeping an eye on. The company’s joint venture with Empire Capital Holdings has so far spent about $180 million acquiring two old Manhattan office towers in the past two months. The venture is looking to scoop up distressed office assets as other real estate investors have backed away from Manhattan’s office market.
Namdar and Empire acquired the 64-year-old 830 Third Ave. office building for $72 million this month and bought the 90-year-old 345 Seventh Ave. for $107 million. The offices were purchased for less than $500 per square foot, much lower than the average Manhattan office price of $896 per square foot. Namdar Realty founder Igal Namdar said, “New York City’s hitting a rough patch now, but we believe long-term, people are not going to work at home. Once everything is settled and, hopefully, the economy gets better, you’re going to see a lot more companies come back and rent space.”
JLL Managing Director Max Herzog advised on one of the deals, and he said the strategy could work if they acquire buildings at low enough prices. Igal Namdar has a personal net worth of about $2 billion, and he amassed most of this wealth during a decade-long play of making all-cash offers on distressed malls. Namdar scooped up more than 250 distressed malls and eventually sold the properties at a profit. Buying distressed office properties could become more common as interest rates rise and borrowing gets trickier for some office owners. Namdar has had success with the strategy before on another type of real estate asset, and if the office market continues to struggle, other investors may soon follow in his footsteps.