Stahl Organization’s $750 million refinancing of 277 Park Avenue highlights the sunken cost fallacy. The landlord had to contribute $250 million to cover an expiring loan, despite having invested $120 million in upgrades. Valuation of the Class A office building fell short of the $1 billion borrowed in 2014, reflecting a tougher lending environment. Stahl’s substantial investment and the building’s uncertain future emphasize the challenge of overcoming sunk costs and the endowment effect, which can cloud rational decision-making in high-stakes real estate investments.
277 Park Avenue
