Back in 2008, Abu Dhabi Investment Council paid $800 million for 90 percent ownership of the iconic Chrysler Building in New York City. It turns out, that wasn't the best of investments.
The skyscraper -- one of the most famous in the nation -- just sold for a paltry $150 million. That's more than 80 percent less than what it went for back in 2008.
However, the new owners aren't exactly getting a big bargain. The land the Chrysler Building sits on is actually owned by a New York college named Cooper Union -- and the rent that the college charges the Chrysler Building has climbed significantly in the last year. In 2018, the rent was just $7.75 million. That's been hiked to $32.5 million in 2019 and will rise to $41 million in less than a decade.
Unfortunately for the owners (old and new), the Chrysler Building isn't commanding the same kind of rent that many other, more modern buildings are able to get. While commercial rents are generally on the rise, the Chrysler Building lacks many of the amenities that newer skyscrapers have. Plus, it's stately Art Deco design doesn't always appeal to people who prefer the floor-to-ceiling windows in modern designs. Maintenance on older skyscrapers -- especially ones with ornate facades -- can also be expensive over time.
It remains to be seen what will happen with the building now that it's under new ownership. It's likely that the former owners -- who bought just before the real estate bubble burst -- had hoped to hold onto the property a bit longer in order to recoup some of their losses but found it untenable given the increased land rental.
Situations like this are a caution for real estate investors. Even in a strong market, you can end up taking a loss if you misread the signs and buy at the wrong moment. For more advice on your real estate situation, talk to an experienced attorney -- before you make a commitment.