A perfect storm of plunging property values for aging buildings, weak tenant demand coming out of the pandemic, and high interest rates for new loans and refinancing has left the $2.4 trillion office building sector wobbling.

For some real estate investors, that may be a good thing.

Several big office buildings nationwide — including in the Manhattan borough of New York City — have recently sold at steep discounts of as much as 70% to opportunistic buyers, who are gambling that they will score big profits when prices eventually rebound.

In April, a little-known firm, Yellowstone Real Estate Investments, paid $185 million for 1740 Broadway, a storied office tower near Columbus Circle in Manhattan. The investment giant Blackstone had paid $600 million for the building a decade earlier.

And this week, two real estate firms snapped up a midtown Manhattan tower for less than $50 million, according to Bloomberg.

Even though these are relatively small buyers, their emergence is a sign of the pain building up in the U.S. commercial real estate market. Distressed deal-making is one of the more visible illustrations of trouble brewing in the sector that could lead to large losses for hundreds of banks and investors in real-estate-backed loans.

Some industry analysts have cautioned that the bargain hunting is the tip of the iceberg, more a sign of quick deal- making than an indication that prices of office buildings have hit rock bottom — especially ones built decades ago.

“Office vacancies are going to heights we have never seen before,” said Chad Littell, national director of U.S. capital markets analytics at CoStar, a commercial real estate data and research firm. “As vacancies are rising, it’s difficult to get debt for buying or developing an office.”

The troubles in the office sector began with the pandemic, which ushered in a lasting shift to remote work. Employers have since had to adjust to not having their workers in the office five days a week, leading many to downsize their office space. That has hit building owners, who depend on regular rents to pay off their mortgages.

Rising interest rates have made things only more difficult, with many owners reluctant to renegotiate financing deals or unable to afford new mortgages — especially if landlords don’t have enough rent-paying tenants. Some building owners have threatened to default on mortgages and walk away from their properties.

At the same time, lenders and investors in bonds backed by commercial real estate loans are trying to stave off foreclosures of buildings and having to incur big losses through distressed sales. Instead, many have given property owners more time, hoping they can recruit new tenants and restart mortgage payments. That strategy is keeping a lid on the number of distressed buildings currently up for sale.

But at some point, foreclosures and distressed sales become inevitable, and that is happening in Chicago, Los Angeles and New York.

So far this year, 16 office buildings with mortgages packaged into commercial real estate bonds were foreclosed on or extinguished — resulting in $500 million in losses for investors nationally, according to Trepp, a data and research firm.