While widely considered one of the world’s most recognizable buildings and a classic of art deco style, the Chrysler building faces a number of challenges that enabled the buyers to nab it for a fraction of the previous sales price.

The tower‘s owners don’t own the ground beneath the property and pay rent on the land to the Cooper Union school.

The annual ground-lease rent the owners pay to the school jumped from $7.75 million to $32.5 million in 2018 and will go up to $41 million in 2028, according to Cooper Union’s financial documents.

Those fees have eaten away at much if not all of the building’s revenue, some brokers said.

The tower also has about 400,000 square feet of space that is vacant or that will become available in the coming years, according to people familiar with the building. That could require about a $200 million investment in the building to attract new tenants, one of those people said.

RFR, led by developer Aby Rosen, emerged the winner after bidding heated up over the past week, say people close to the sales process. Developers Ashkenazy Acquisition Corp. and RXR Realty were among the other bidders, according to these people.

While it isn’t clear what RFR’s strategy is to address the tower’s issues and squeeze profits out of the building, RFR has tangled with ground leases before. The company has been trying to refinance the loan on the classic Modernist Park Avenue tower called the Lever House because the ground rent would rise from $6.15 million to more than $20 million in 2023, an unsustainable level, according to Trepp. The property is in foreclosure, according to Trepp.

RFR may need to upgrade the building significantly to make it more appealing to new tenants and allow the new owners to boost rents, said Craig Deitelzweig, chief executive officer of owner and developer Marx Realty. Renovations to 10 Grand Central, a 1930s building Marx owns in the same neighborhood, resulted in significant rent growth, he said.

Mr. Rosen, known for his substantial art collection, has also made a name for himself in New York’s world of fine dining. At the Seagram Building, he declined to renew the lease of the Four Seasons, the storied restaurant, with a who’s who list of regulars, that had been run in recent years by Alex von Bidder and Julian Niccolini.

Instead, Mr. Rosen tapped the Major Food Group, a restaurant company that has emerged as one of the prominent players in the downtown dining scene. The bet paid off—at least critically: Major Food Group opened two restaurants, the Pool and the Grill, in the space, with the Grill earning high praise from several reviewers.

The sale marks the latest twist in the storied history of the 89-year-old building.

Chrysler Corp. founder Walter P. Chrysler took over the project from its previous developer, jumping into a race to become with world’s tallest building with the developer of the Bank of Manhattan building at 40 Wall St. Mr. Chrysler shifted plans for the building, which was completed in 1930, adding the crowning dome and spire. The Chrysler Building only held the title until 1931 when the Empire State Building took top place.

Tishman Speyer, which bought the building and two adjacent properties out of foreclosure in the late 1990s, initially spent $100 million in improvements on the properties. Tishman still owns 10% of the building but is selling that stake to the new buyers.

The tower is considered a quintessential New York character, making appearances in several movies, including “Spider-Man,” “Men in Black 3” and “The Wiz.”

The Chrysler Building’s sellers were represented by Darcy Stacom and William Shanahan of real-estate services firm CBRE Group Inc. The Real Deal previously reported that RFR was nearing a deal to buy the tower.