The Investor Who Won Big on Zombie Malls Is Going All-In on Empty Offices
New York-based Namdar and partners have acquired 10 buildings for more than $480 million since 2021
An investor known for squeezing cash out of dying malls is now trying a similar approach to profit from tanking office towers.
Namdar Realty Group started buying office buildings in major markets after the pandemic hit and office values plummeted. The Great Neck, N.Y.-based company and its partners have acquired 10 office buildings for more than $480 million since 2021 in prime locations across Chicago, Cleveland and New York City.
Namdar bought the properties at significant discounts to what they were worth before the pandemic, betting their values would rise as workers returned to the office. Meanwhile, the company is trying to slash expenses at its office buildings, echoing the extreme cost-cutting approach it deploys at the dozens of enclosed malls it owns.
“We think back-to-work, back-to-office will happen,” Chief Executive Igal Namdar told The Wall Street Journal in 2023. “If we can buy quality office buildings, avenue buildings, corner buildings, at a great price per square foot, we think it’s a great buy for us.”
The office market is showing signs of recovery and attracting more investors, but Namdar is still trying to find its footing. Office gains are mostly concentrated in premium buildings as office attendance remains below prepandemic levels. Namdar has purchased well-located but older buildings, which will need renovations and other investments to attract tenants.
In some buildings, Namdar is on a collision course with local unions, an issue that didn’t crop up in its mall-buying strategy.
Namdar’s core business is retail. The company has bought dozens of failing shopping centers at rock-bottom prices, extracting cash by cutting costs to the bone. They appeal their property assessments to lower their tax bills, while maintenance issues such as parking-lot sinkholes fester, to the outrage of town officials.
It’s a lucrative strategy. Namdar in September reported a gross profit of $148.3 million, a nearly 10% increase from the same month a year earlier, according to securities filings with the Tel Aviv Stock Exchange, where the company’s bonds trade under the name Namco Realty.
Namdar started buying office buildings in major cities in 2021, betting that the recently released Covid-19 vaccine would end the pandemic and rejuvenate office demand.
Its first major office deal was a cluster of four buildings near Manhattan’s Madison Square Garden that the firm and a partner bought for $107 million.
Early efforts to make the office strategy work came up short. Namdar wanted to convert the portfolio’s main office building at 345 Seventh Avenue to housing since “the city was rumored to be changing the property’s zoning,” said Dan Dilmanian, chief operating officer at Namdar.
But Namdar’s conversion plans went nowhere because, Dilmanian said, the zoning laws never changed.
Instead, the company renovated the building’s lobby, common areas and outdoor facade. But the property’s appraised value continued to decline.
By late 2024 Namdar’s lender was moving to foreclose. Namdar ended up selling the four buildings on Seventh Avenue at a $42 million loss, according to Dilmanian.
Namdar’s labor problems flared up when the firm tried to squeeze costs. As Namdar acquired office buildings, an obvious cost-cutting target was the unionized cleaning staff, which are paid $30 an hour and receive high-quality benefits, said Denis Johnston, executive-vice president at 32BJ SEIU, whose members work in several Namdar buildings.
The union held rallies outside Namdar’s buildings to pressure the company to give its workers union pay and benefits, Johnston said. Elected officials also criticized Namdar’s labor tactics.
“If part of their playbook is going to be replacing union employees with nonunion companies that are taking advantage of low-wage workers, we want to nip that in the bud,” said Alex Bores, a member of the New York State Assembly.
Dilmanian said the company values its relationships with unions and employs union staff at many of its properties.
Some think Namdar is turning a corner. Its Fifth Avenue building in Manhattan is nearly fully leased after the company upgraded the lobby and amenity space. Adelphi University signed a 20-year lease for three floors, said Mitch Konsker, a vice chairman at real-estate firm JLL, which Namdar has hired to handle leasing.
Michael Rudder, principal of Rudder Property Group, has worked with Namdar at several of its properties and said its strategy of buying office buildings when prices are low will pay off as the sector recovers.
“I think when it averages out at the end of the day, he’s going to get very rich from all this,” he said.