The potential sale of the 30-story HSBC office tower in Manhattan has fallen through again, one of the latest signs of financing struggles for office properties across the country.
Israel-based Property and Building Co. couldn’t close a deal to sell the 865,000-square-foot 452 Fifth Ave. building in New York City to an unidentified buyer, the company said in a filing with the Tel Aviv Stock Exchange.
It was the second time in less than a year that a deal for the property fell through. In May, an $855 million sale of HSBC’s New York headquarters failed to close after the global banking giant’s decision not to renew its lease for nearly two-thirds of the building. HSBC occupies more than 547,000 square feet at 452 Fifth on a lease that runs until April 2025.
Property and Building did not immediately respond to a request for additional information from CoStar News.
HSBC has announced plans to downsize and relocate to Tishman Speyer’s Spiral project on Manhattan’s west side. The London-based firm intends to occupy just 265,000 square feet at the 65-story, 2.8 million-square-foot office building at 66 Hudson Blvd.
Property and Building said in November that it had lined up a potential buyer and gave it 60 days to conclude an agreement. That agreement had been extended once for an additional 30 days in January.
Property and Building said in the latest filing that it would continue to seek a buyer as it tries to re-lease the tower.
A news report out of Israel and translated through Google noted that a sale agreement failed to materialize as the buyer could not secure acquisition financing.
High interest rates and space-cutting efforts by large firms are increasingly pressuring even some of the largest real estate investors and office developers.
Columbia Property Trust, which owns top-tier office properties in gateway cities from New York to San Francisco, recently defaulted on a $1.72 billion floating-rate loan backed by seven of its owned towers.
Vornado Realty Trust’s Fifth Avenue and Times Square joint venture disclosed a $450 million loan default on a prime Fifth Avenue retail property in New York as CEO Steven Roth said there are very few transactions on Fifth Avenue and in Times Square, the two neighborhoods that house properties under the venture.
In July, Property and Building, one of Israel’s largest construction firms, completed a $350 million refinancing of 452 Fifth. JPMorgan Chase provided $350 million in new financing. The loan matures in September 2024 and carries two one-year extension options, according to previous Tel Aviv Stock Exchange filings by the firm.
Following the refinancing, Property and Building reported the value of the office building had been reduced to $720 million.
The pandemic’s negative impact on the New York office market is still evident at the start of 2023. The availability rate in New York, currently at 16.1%, remains elevated compared to the pre-pandemic total of 11%, according to CoStar analysis. With some occupiers viewing remote work as a productive and cost-effective alternative, the amount of available sublet space has risen over the past 12 months.