Urban Life 📍

America’s battered office market is holding a fire sale, featuring some buildings marked down by more than 90%.

In Chicago, real-estate developer Marc Calabria bought a 485,000-square-foot office building for $4 million. The building sold for $68.1 million a decade ago.

Developer Asher Luzzatto paid a mere $5.3 million for the Denver Energy Center, after a foreclosure process. The two-building complex sold for $176 million in 2013.

Even the federal government’s landlord is getting in on the act. The General Services Administration last month sold a 940,000-square-foot building to a residential converter for $24 million, a tiny fraction of its value a few years ago.

Landlords and their lenders held on to their office towers for years, hoping for a turnaround after Covid. Now, they are accepting enormous losses. Owners and creditors are capitulating to the reality that more employees are splitting their work time between home and office. They are also resigned to stubbornly higher interest rates, which lower property values and make it harder for buyers to borrow.