New York developer Harry Macklowe brought himself to the edge of financial ruin by overloading on Manhattan office buildings.

Now, investors are wondering whether Mortimer Zuckerman's Boston Properties Inc. also is making a risky bet on Manhattan by snapping up Mr. Macklowe's prized General Motors building and three other properties for about $1.47 billion plus $2.47 billion in debt. The purchase enabled Mr. Macklowe to fend off his creditors.

The deal is uncharacteristically flashy for the Boston-based company, one of the country's largest publicly owned office-building landlords, and chairman Mr. Zuckerman, who also is known for his media holdings. Its strategy has been to buy and build properties in four core markets: Boston, New York, Washington and San Francisco. Investors cheered that it sold more than it bought in 2006 and 2007, when the market was near its peak.

"We were very happy to sell when other people were buying, and it made it possible for us to have the capital to do what we just did," says Mr. Zuckerman, whose company announced Tuesday that it had closed on the GM building.

Yet, it surprised many to see Boston Properties jump back in so quickly and agree to pay the highest price ever for a single office tower, as $2.8 billion of the deal price, including debt assumption, is solely for the GM building. The company is buying the portfolio at a time when New York employers continue to shed thousands of financial jobs.

To be sure, the GM building's price tag was considerably lower than the $3.5 billion Mr. Macklowe predicted he would get. But the direction of commercial-real-estate values is far from clear, with tepid deal activity and financing very difficult to obtain.

What's more, Boston Properties had to increase its price by close to $100 million to fend off rival Vornado Realty Trust, another large New York office-property owner, which lobbed in a topping bid at the last minute, according to people familiar with the matter.

Mr. Zuckerman is bullish on Manhattan, despite the near-term market conditions. "You have the combination of constraints on new supply, higher costs when you can build new supply and, in our judgment, a very strong demand," he says. Moreover, he says, tenants will always want to be in the GM building. "That is a building in which there is more demand than there is supply."

Others aren't so sanguine about the Manhattan market. Marc Holliday, chief executive officer of SL Green Realty Corp., another big Manhattan landlord, predicts effective rents will fall 10% to 15% over the next two years, largely because of sublease space that will be put back on the market by firms linked to the financial sector.

Cautious about the economy, many tenants are holding back on making big leasing decisions.

"The phone isn't ringing as much," says Ric Clark, chief executive of Brookfield Properties Corp., an owner of downtown-Manhattan office buildings.

One problem for Boston Properties is that Mr. Macklowe placed such a high amount of debt on the GM building, $1.9 billion, that its cash flow barely covers debt service, by some analysts' estimates. The building is mostly leased with long-term tenants, including the law firm of Weil, Gotshal & Manges LLP, which holds more than one-fourth of the space at $48 a square foot and doesn't come up for re-lease until 2019, according to public documents. The lease of the next largest tenant, Estee Lauder Inc., doesn't expire until 2020. The prospect of boosting those rents to market rates of more than $150 a square foot once the leases roll over, while tantalizing, could take a decade or more.

Also concerning investors is the size of the stake Boston Properties is taking in the deal. Many investors hoped the company would take less than 30% and get most of its returns from lucrative management and leasing fees. But Boston Properties' stake is going to be in the 48% to 49% range for the weighted portfolio and 60% of the GM building itself. A group from the investment authorities of Kuwait and Qatar, along with Goldman Sachs Group Inc., took 20%, and a group affiliated with the ruling family of Dubai took another 20%, Mr. Zuckerman said.

Boston Properties' stock has barely budged since it announced the Macklowe deal, a sign of the company's strong reputation with Wall Street as a developer and investor. It was co-founded in 1970 by Mr. Zuckerman and Edward Linde and methodically built a portfolio of about 50 properties, focusing recently on trophy buildings, like Embarcadero Center in San Francisco, and the best-located development sites. Meawhile, Mr. Zuckerman acquired the newsweekly U.S. News & World Report and the New York Daily News, a Manhattan tabloid.

Mr. Zuckerman says people who want the company to take a small equity stake and make money on fees don't understand the company's business model. "We are not about management fees," he says. "We're about building a group of assets...of the highest quality."

Boston Properties plans to do that by holding the GM building for a long time. Even before the big leases roll over, the company could unlock some of the building's value by negotiating to take back space from tenants and sharing the profits on new, higher-rent leases with them, analysts say. Company executives believe the building's retail space alone, which includes a well-trafficked Apple Inc. store, is worth more than $1 billion.

Some investors, though, are taking a wait-and-see approach.

"There could be a really compelling story for why they are buying this thing," says Dean Frankel, portfolio manager of Urdang Securities Management, which held just fewer than 1.1 million Boston Properties shares as of March 31, according to Thomson Reuters. "But I don't know that yet."

Write to Jennifer S. Forsyth at jennifer.forsyth@wsj.com

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