Office tower prices plunge

NEW YORK —- The 40-story skyscraper sits on a prime corner in the country’s wealthiest commercial market, steps from the Museum of Modern Art and a few blocks from Rockefeller Center and Central Park.

It recently sold for $100,000.

The 1330 Avenue of the Americas building —- which sold for close to $500 million three years ago —- was auctioned last month for the minimum to a Canadian pension fund unit after owner Harry Macklowe defaulted on a $130 million loan.

A month before that, the John Hancock Tower —- Boston’s tallest skyscraper —- sold at auction for just over $20 million. The 33-story Equitable Building in downtown Atlanta is set to go up for auction next month; its owners owe more than $50 million to the bank and have only half of the building leased.

Loan defaults in the worst commercial real estate market in decades have created tens of billions worth of distressed properties across the nation, sometimes forcing cut-rate auctions of landmark skyscrapers. Developers are falling behind on mortgages as tenants leave and can find no financing to cover payments, analysts say.

So they are selling skyscrapers at a drastic discount, with the condition that the new buyer take on the enormous amounts of debt connected to the properties.

“This is a train wreck that’s coming in the large office towers,” said Matthew Haines, chairman of the Propertyshark.com real estate Web site.

Real Capital Analytics, which tracks commercial real estate transactions, counted more than $86 billion worth of distressed properties in the country as of April, more than $6 billion in Manhattan.

Many of the towers that are likely to go up for sale were bought at inflated prices during the boom three to five years ago and could lose over half their value at sale, analysts said.