RXR and Ares Management are partnering to invest in New York City’s distressed office buildings. RXR and Ares are planning to target a sliver of office buildings around the city that they believe are still appealing but that may need fresh capital to remain competitive or a restructuring of debt to reflect the new realities of high interest rates and slower rent growth.

“We have clarity as to where rates are, we have clarity about the future of offices, and which buildings are going to be competitive, and we have capitulation, I think, to a recognition that values aren’t just bouncing back like they did in ’08,” said RXR Chairman and CEO, Scott Rechler. “There’s a reset and this is more permanent.”

Craig Snyder, an Ares partner, said that “the broad, indiscriminate flight ofinstitutional capital from the office sector has resulted in many high-qualityproperties trading down to historic lows,” and that the partnership was “hoping toidentify long-term winners”.