The owners of an office property in Manhattan's Financial District have defaulted on their loan after losing several tenants.

Savanna and Pacific Oak Capital own 110 William St., but were told by their lender in June that they are now in default after failing to make payments on their loan, according to a Pacific Oak Securities and Exchange Commission filing submitted this week. The company said it is in negotiations on a loan extension with Savanna and its lender.

Several tenants have left the building in recent years, including the New York City Economic Development Corp., which decamped to 165 Broadway, leaving a third of the building’s square footage empty, The Real Deal reports. The New York City Housing Development Corp. will soon follow after signing a 109K SF lease to move to 120 Broadway this month.

While the filing didn’t name the lender, the firms received a $349M loan from Invesco Real Estate three years ago, according to a Commercial Observer report. Pacific Oak has a 60% stake in the 928K SF property and said its investment balance in the building is $85M, according to the SEC filing.

The Lower Manhattan office market has the highest availability rate in the city, as companies reassess and recalibrate their space needs. Manhattan availability is at 17%, while Downtown is at over 20%, according to Colliers. Leasing in the city was showing signs of recovery in the second quarter of the year, but is still below pre-pandemic figures.

Older office buildings have struggled to retain tenants, and they are among the properties having the hardest times securing financing as lenders are increasingly uncertain about their value, in light of the popularity of hybrid work arrangements and the flight-to-quality trend in new leases.