Weekly Market Report - April 22, 2025
- Broker Support
- May 2
- 11 min read
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Firm hedged that tariffs could suppress construction, boost values
Blackstone executives have expressed concerns about the response of the real estate industry to President Donald Trump's tariffs. Chief Operating Officer Jon Gray suggested that the current period may slow some movement towards real estate. This is a sobering outlook for an industry that has either stayed quiet or offered mixed commentary on how a trade war and its possible knock-on effects could affect dealmaking. However, Blackstone's distributable earnings for its real estate segment fell 20% YoY to $495 million, the largest drop in a four-quarter streak of declines. The firm's real estate assets under management also shrank 5.6% to $320 billion in Q1 compared to last year. CEO Stephen Schwarzman highlighted some silver linings, such as tariffs likely driving up construction costs and stymieing new supply. However, Schwarzman cautioned that recession is still on the menu amid Trump's trade policy.
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Tech giant will take over 330,000 square feet at 30-story office tower
Amazon has secured a 330,000-square-foot lease at Property & Building Corp's 10 Bryant Park, marking one of the largest Midtown office leases since the pandemic. The tech giant will replace space vacated by former anchor tenant HSBC, and the deal signals positive momentum for Midtown's office market. Amazon is in talks to lease space at the 30-story building, which is located next to the Lord & Taylor building that Amazon purchased in 2020 for $1.2 billion and uses as its Manhattan headquarters. Amazon will pay $29.5 million per year in rent, with rent increasing to $32.2 million after five years and $34.8 million in ten years.
Amazon also has the option of expanding its space at a smaller building on 39th street behind 10 Bryant Park. The lease marks the final chapter in a remarkable turnaround story for 10 Bryant Park, a building formerly known as the HSBC Tower. PBC acquired the 30-story tower for $330 million in 2010 from HSBC and put in over $100 million in renovations. The tower was listed for sale in 2021, with several major firms bidding on it. However, Andrew Chung's winning bid of $855 million failed to close, and PBC refinancing its debt and renovating the building.
Leasing by businesses hit a recent high in the first quarter, but economic uncertainty is prompting a pause in some dealmaking
The office-market recovery in the US is facing risks from trade war and recession fears, potentially affecting cities. Companies are slowing or halting office leasing plans due to economic uncertainty, and new tariffs could lead to inflation and discourage development. The fragile recovery could pose a significant setback for big cities, whose economies rely heavily on office business districts for taxes, jobs, growth, and the health of small businesses. Higher tariffs could also hurt by leading to inflation and higher interest rates, which discourage new development. Many cities also have obsolete office buildings that need to be converted to apartments or other uses, which could be delayed if high costs and rates persist.
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Marc Rowan’s alternative asset manager leases 100K sf
Apollo Global Management has finalized a lease deal for 100,000 square feet at 590 Madison Avenue, owned by the State Teachers Retirement System of Ohio and managed by Edward J. Minskoff Equities. The property is expected to occupy the 10th through 13th floors by the end of next year. The asking rent at 590 Madison was $190 per square foot, though no specific rent details for tenants have been disclosed. A CBRE team represented Apollo in the transaction, while a CBRE team represented management alongside Minskoff’s Jeffrey Sussman and Matthew Pynn in-house.
It is unclear how the lease will affect Apollo’s other office holdings in New York City, which include 71,000 square feet at 1095 Sixth Avenue and its 185,000-square-foot headquarters at 9 West 57th Street. Apollo pushed back against the Observer’s previous report that employees at the Sixth Avenue office could be relocated to Madison Avenue. The office building was made available for sale by STRS Ohio two months ago, with the pension fund pricing the property at $1.1 billion, potentially leading to the city's first billion-dollar investment sale in two years.
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A new study by the Real Estate Board of New York and Placer.ai reveals a significant divergence in foot traffic between trophy office towers and other buildings in Manhattan. Class-A-plus offices in Manhattan were visited at 81% of 2019 levels in February, compared to 63% for Class-A and A-minus buildings and 66% for Class-B and C offices. The data covers 350 buildings with a combined square footage of 225M SF, or roughly 50% of Manhattan's office stock. In February, the city's office visitation rate averaged 67.3%, virtually unchanged from a year earlier.
The gap between prepandemic office usage and today's behavior has changed only marginally since 2023. The study also showed that the underlying dynamics of the market have changed, with top-tier offices capturing 42% of visits in 2025. The visitation share for the next tier of properties, Class-A and A-minus, saw their share of visits drop from 43% to 41% between 2019 and 2025. The study also showed that the maxim of "location, location, location" is still holding true when it comes to office visitations.
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Developer pulled application from financing program that RXR, TF Cornerstone seek for 175 Park Avenue
Larry Silverstein withdrew his application for a $3.7 billion loan to develop 2 World Trade Center from a federal program designed to finance rail infrastructure improvements. Scott Rechler and the Elghanyans applied for the same program for $4.8 billion to finance their supertall office/hotel tower at 175 Park Avenue. Silverstein Properties submitted an application with the U.S. Department of Transportation for its Railroad Rehabilitation and Improvement Financing program, which offers 35-year loans at the rate of the government's cost of borrowing.
The project withdrew its Letter of Interest (LOI) in June. A source familiar with the project said the company has moved on to an alternative source of financing with less red tape. The 93-year-old developer has faced decades of challenges building the 2.8 million-square-foot tower, including Rupert Murdoch walking away from negotiations for his 21st Century Fox and News Corp. to anchor the project in 2016. Silverstein recently turned to American Express, talking with the bank about kickstarting the project. Financing remains an issue, raising questions about the viability of the Department of Transportation financing a project like 175 Park Avenue, particularly under the Trump administration.
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The company’s cavernous House of Sport locations run counter to most retailers’ space preferences
Dick's Sporting Goods is expanding its House of Sport stores to create a more immersive shopping experience for customers. The stores, averaging 120,000 to 140,000 square feet, offer amenities such as rock-climbing walls, golf simulators, and outdoor running tracks. The company plans to open dozens more House of Sport locations over the next 10 years, with the goal of having them comprise more than a quarter of the company's total fleet. The House of Sport stores generate about $35 million in their first year of operation, compared to $14 million at Dick's new smaller locations. The company is focusing on big-box space, despite concerns that consumer spending will slow significantly this year. Dick's has opened 21 House of Sport locations since 2021 and plans to add dozens more over the next 10 years, with House of Sport stores eventually comprising more than a quarter of the company's total fleet.
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Axsome Therapeutics, a biopharmaceutical company specializing in depression treatments, has signed a 96K SF sublease deal at One World Trade Center, the tallest building in the Western Hemisphere. The deal is taking the space from Advance Publications, which leases 1.2M SF of the 3.1M SF supertall. Axsome Therapeutics is already headquartered on the 22nd floor of One World Trade and signed a 10-year, 48K SF sublease with Advance two years ago.
The 1,776-foot tower is owned by the Port Authority of New York and New Jersey and The Durst Org., which manages the property. The 104-story One WTC was 95% leased as of November last year. The media company has struck several sublease deals for the space in recent years, including a 48K SF deal with Kroll. Axsome's deal was part of Manhattan's strongest quarter for office leasing since 2019, with year-over-year availability dropping from over 20% to 17.7%. The first quarter's largest deal was Jane Street's renewal and expansion at Brookfield Place, which powered the WTC/Brookfield submarket to its most active quarter since 2014. Lower Manhattan's office market is still more than 18% available, below the Manhattan average of 16%.
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Anonymous party proposes takeover of five-star UES property
Izak Senbahar is set to sell the Mark Hotel in the Upper East Side to an anonymous entity, who has proposed a $1 billion takeover. The five-star hotel, which includes 150 rooms, is owned by Senbahar's Alexico Group. The hotel has been refinanced several times, with the most expensive room priced at $45,000 per night. Last year, Alexico refinanced the property with a $335 million loan, with a majority of the debt coming from a $300 million commercial mortgage-backed securities loan provided by Goldman Sachs. The hotel's recent offer suggests it is considered significantly more valuable than it was a few years ago. If Alexico decides to sell the Mark Hotel for $1 billion, it would represent a redefining moment for New York City's hotel market. Last year, Gencom bought the Thompson Central Park Hotel for around $289 million, the most expensive transaction of the year, and a $1 billion offer would more than triple that.
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Developer lands $65 million construction loan for long-stalled 140 West 57th Street project
The Feil Organization is constructing a luxury office-to-resi conversion on Billionaires' Row, with joint venture partners BLDG and the Nakash Family. The 14-story office building will be converted into 47 luxury condos, with amenities including a landscaped rooftop lounge and fitness center. The project, which will preserve the 1908 building's neo-Gothic facade, is expected to be completed in late 2026. However, progress has been slow due to zoning regulations and a lawsuit.
In 2009, Feil bought the building from Harry Macklowe for $59 million. In 2015, Goldstein Hill & West was hired to study the feasibility of a residential conversion, finding that 11,000 square feet of residential space could be added for a total of 80,000 square feet. However, a preexisting zoning lot development agreement limited the building's floor area, and Feil sued Goldstein Hill & West for $12.6 million. In 2018, Feil put the vacant office building on the market, and by 2020, MdeAs led the design. The Beaufort, originally designed as studios and residences for artists, was later converted to rentals and offices.
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Owners plead for increase as distress deepens
The Rent Guidelines Board in New York City has recommended a 6.25 percent rent hike on one-year leases to address the city's rent-stabilized buildings. However, landlords are hesitant, as the adjustment is not a bad deal. Two-year leases saw a larger recommended hike at 9.75 percent, supporting owners' arguments that expenses were soaring and revenue wasn't keeping pace. The board's decision to vote based on the data is likely to be influenced by the annual Price Index of Operating Costs, which tracks taxes, fuel, utilities, insurance, and maintenance.
This year, the report showed an 18.7% jump in insurance, 10.3% in fuel, and 8.2% in utilities. The board's decision to approve a 2.75 percent hike is a key part of the annual charade, as the board weighs the interests of tenants, landlords, and the public. The public members typically support rent-burdened tenants and vote toward an increase that lags the board's data-based recommendation. Landlords, expecting the board to turn a blind eye to its findings, have begun to shift their appeal. After the PIOC report dropped, Burgos called on the city to intervene in government-controlled costs like property taxes, water, and sewer to make the city more affordable.
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Firm looks to sell 200 Lafayette Street, currently leased to Eataly, Moncler
Brookfield is reportedly seeking to sell the Eataly market home at a price of $40 million. The two-story retail condo at 200 Lafayette Street is leased to Eataly on the ground and basement floors, while Moncler leases over 11,000 square feet of office space on the second floor. The property is being marketed by a Newmark team led by Adam Spies and Adam Doneger. The lease for Monceler runs through 2033, while Eataly's expires five years later. Brookfield acquired the property through its acquisition of GGP in 2018. The property has been the subject of several investment sales deals, including Blackstone's $200 million portfolio, Isak Andic's $27 million purchase of the retail condo, and an unidentified Japanese investor's $47 million purchase of the Cartier-leased space at 102 Greene Street. Brookfield also recently sold the Midtown office building to B&H Photo for $150 million, a $105 million decrease from the company's 2018 purchase price.
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Trustee of $419M debt granted summary judgment
A state judge has granted a summary judgment to Wilmington Trust, which holds $418.5 million in debt backed by the West Nyack mall. The judge also appointed a referee to determine the amount owed and if the mall can be sold piecemeal. Wilmington Trust filed to foreclose on the 2.2 million-square-foot shopping and entertainment complex in 2023, claiming that Syracuse-based owner Pyramid Management Group defaulted on the loan tied to the Rockland County property. The loan was due to mature in April 2021, but Pyramid requested a temporary moratorium on payments early in the pandemic.
The two sides reached a standstill agreement in June 2020 and extended the loan's maturity date. In the fall of 2022, Pyramid allegedly went into default after failing to make good on the payments. Spinoso Real Estate Group operates the property. The mall's market value was pegged at $300 million, but appraisers recorded the property's value at $425 million in 2020, less than half of the $881 million it was valued at in 2016. A virtual hearing in the case is slated for the beginning of August.
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The closures put 750 jobs at risk
The U.K. arm of Spanish lender Santander is set to close 95 of its 444 branches, putting 750 jobs at risk, as customers increasingly favor digital banking. Of the remaining 349 branches in Santander UK’s network, 290 will offer full services while the others will operate on reduced hours or be counter-free from June, the lender said Wednesday. “The bank has seen a rapid movement of customers choosing to do their banking digitally, with a 63% increase in digital transactions since 2019, while financial transactions completed in branches reduced by 61% in the same period,” it said. Santander UK has around 18,000 full-time equivalent employees and 14 million active U.K. customers, according to its latest annual report.
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State lawmakers have filed a raft of bills aimed at reducing property taxes—or gutting them altogether
Florida's leaders are considering the idea of eliminating property taxes to cut the soaring costs of owning a home. Killing property taxes would leave the state more reliant on its sales tax and strip local governments of revenue to fund everything from schools to social services. A full repeal is unlikely soon, but the idea is gaining political traction, reflecting the strain homeowners are under. The property-tax system is among the top issues under discussion in the legislative session that began this month.
Eliminating property taxes would be the first such move in the nation. Republican Gov. Ron DeSantis urged the Legislature in his recent State of the State address to provide relief from such taxes. Florida’s lawmakers have filed dozens of bills on the issue, ranging from proposals to end property taxes to smaller tweaks to give targeted help to homeowners. “People are getting crushed not just by home insurance but by property taxes,” said GOP state Sen. Jonathan Martin, who is sponsoring a bill that would require a study on the elimination of property taxes be completed by October.
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