Worldwide Plaza Value Collapses as U.S. Office Rout Widens

U.S. office-property values are deteriorating at an accelerating pace, with several high-profile assets suffering steep markdowns that threaten owners, lenders and bond investors. In the most dramatic move, the latest appraisal on Manhattan’s Worldwide Plaza put the 2 million-square-foot complex at just $345 million, down from $1.74 billion when the debt was packaged into commercial mortgage-backed securities in 2017. The plunge raises the prospect of losses for bondholders tied to the loan. Elsewhere in New York, the ground lease on a Midtown Class A tower has lost about 90 percent of its value, and a separate luxury hotel-and-condo development assembled during a multibillion-dollar buying spree is at risk as its owner struggles with falling rents. The stress extends beyond Manhattan. In Boston, landlord Kambiz Shahbazi said the value of his four office buildings has tumbled as pandemic-era tenant departures leave space empty. At the city’s waterfront, Seaport Entertainment Group—backed by billionaire investor Bill Ackman—agreed to sell the 250 Water Street development site for $150.5 million, roughly $30 million less than its 2018 purchase price and well below additional investments in air rights. The rapid repricing underscores the depth of the post-pandemic downturn in U.S. commercial real estate, especially in older urban offices, and is intensifying pressure on owners to restructure debt or offload assets at a loss.