Weekly Market Report - August 13, 2026
- 6 days ago
- 10 min read
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The developers of the proposed $4.5 billion office tower at 350 Park Ave. are seeking additional investors amid a dispute between Mayor Zohran Mamdani and Ken Griffin, founder of Citadel. Vornado Realty Trust and Griffin's venture aimed to construct a 1.9 million-square-foot Midtown skyscraper, anchored by Citadel. Tensions arose after Mamdani criticized Griffin in a video, prompting Griffin to consider scaling back New York plans in favor of expanding in Miami. Despite this, he maintains a 60% stake in the Park Avenue project.
Vornado’s CEO, Steven Roth, indicated that the partnership is looking to invite wealthy family-run investment firms to purchase stakes of up to $200 million in the 64-story tower. Vornado holds a 36% interest and Rudin a 4% interest. Roth mentioned a potential 25% stake sale that would allow both the existing partners and buyers to profit. The decision on proceeding with the project has been delayed until the end of August, although demolition at the site has begun, and a significant $3.3 billion construction loan is ready. Roth expressed optimism about New York’s real estate market, specifically prime Park Avenue.
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In July, the Manhattan office market experienced a surge in leasing activity, with tenants signing deals for 3.87 million square feet, reflecting a 27 percent increase from June and approximately 28 percent year-over-year. Year-to-date leasing volume reached 26.6 million square feet, positioning 2026 for its strongest annual total since 2000. The supply of available space decreased to 66 million square feet, the lowest level since September 2020, with Midtown South representing nearly half of all leasing activity.
Notably, Anthropic secured a 466,000-square-foot lease at 330 Hudson Street. Other significant leases included NBCUniversal's 244,000-square-foot renewal and Aon's 202,000-square-foot renewal. The current 66.2 million square feet of available space marks a 32 percent decline from the pandemic peak in February 2024 and an 18 percent drop year-over-year. Additionally, sublet supply fell by 700,000 square feet to its lowest level since August 2019, with steady asking rents at around $78 per square foot, the highest in six years.
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Last month, artificial intelligence firms dominated the largest office leases across New York City’s five boroughs, securing three spots in the top ten. Notably, Anthropic emerged as the largest lease, occupying 466,000 square feet at 330 Hudson Street in Soho, nearly double the size of the second-largest deal. NBCUniversal took the second spot with a 244,000-square-foot lease renewal at 1221 Sixth Avenue in Times Square. Loeb & Loeb, a law firm, secured the third position by renewing its lease at 345 Park Avenue, expanding its space by 19,000 square feet to reach 179,000 square feet.
Other significant leases include Cerberus Capital Management with 131,000 square feet at 875 Third Avenue, and United Talent Agency consolidating 101,000 square feet at the Empire State Building. AI companies continued to make their mark, with Legora leasing 98,000 square feet at 11 Madison Avenue, and NormAI signing for 64,000 square feet at 1 World Trade Center. Additional agreements included HDR at 75,000 square feet in Penn Plaza and Energy Capital Partners at 70,000 square feet in the Financial District, along with Glasshouse at 66,000 square feet in the same area.
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The Mamdani administration is set to construct over 50,000 housing units on 100 city-owned sites, with plans to expand the pipeline annually. Mayor Zohran Mamdani's administration is building upon his executive order from his first day in office, which established a task force (LIFT) aimed at identifying city-owned properties for 25,000 housing units over the next decade. The task force is currently focused on financing projects that have been initiated but not completed, having identified sites mostly from previous announcements. Six of the projects are exclusive to this administration, with an emphasis on expediting long-stalled developments.
The administration aims to release five requests for proposals each year for undisclosed sites, prioritizing community engagement before making site details public. Despite having 15,000 properties, many aren't suitable for housing; only a minority are vacant or unused. A report noted that while 20% of lots are vacant, two-thirds are zoned for residential use. Former administrations had attempted similar initiatives. The broader goal is part of Mamdani's commitment to building and preserving 400,000 housing units in a decade, though funding remains uncertain. On a recent Bronx bus tour, the mayor showcased three development sites, receiving both support and mixed reactions from the public.
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Over 31,000 properties in New York are potentially subject to the newly implemented pied-à-terre tax on second homes, significantly surpassing earlier estimates of 10,000. The city's Finance Department published this data, notifying owners of their potential liability. This initial list identifies properties with fair market valuations exceeding the tax thresholds and includes 6,800 Class 1 Properties (single-family homes and townhouses) and over 24,700 Class 2 properties (co-ops and condominiums). As the tax, which aims to generate $500 million annually to help address a multibillion-dollar deficit, rolls out, many properties may be contested by owners appealing their classifications.
Experts suggest that many initially flagged could be mistakenly identified as non-primary residences, with some possibly rented out and thus exempt. The city's limited visibility into property usage complicates assessments. Property owners will receive bills by August 30 and have 30 days to contest. A final list determining taxable second homes is expected by December 31. Concerns arise that the tax could negatively impact the luxury real estate market and alter demand for high-end properties.
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Olmstead Properties has successfully signed 14 leases totaling 24,000 s/f at 299 Broadway in Tribeca over the past six months, achieving a 96% occupancy rate. This represents one of the building’s most active leasing periods recently, reflecting a shift in tenant demand toward architecture, design, technology, creative, showroom, and boutique financial firms. Notably, Gluckman Tang Architects secured a seven-year lease for 3,400 s/f on the 17th floor, where Olmstead is building a customized office space for them. The lease emphasizes increasing demand for distinctive office spaces in Tribeca. In response, Olmstead is launching an initiative to enhance office environments by redesigning common corridors and offering premium office suites for the evolving tenant profile.
Historically attracting law firms, 299 Broadway now appeals to creative sectors seeking character-rich spaces. Olmstead plans to create larger floor plates into suites ranging from 2,600 to 6,500 s/f and will upgrade existing spaces to meet current leasing trends. The project aims to deliver designed environments that tenants can occupy quickly, minimizing wait times for build-outs. Olmstead’s focus is on creating office spaces reflecting Tribeca’s quality, design, and experience, reinforcing the demand for such environments. Conveniently located, 299 Broadway provides access to significant neighborhoods and metro lines, enhancing its appeal as an office destination in Lower Manhattan.
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Vornado Realty Trust, along with Citadel and Rudin, is advancing plans for the 350 Park Avenue site, having secured a significant $3.3 billion construction loan, one of the largest in New York City history. The financing will support a 2 million-square-foot office development, despite the total project estimated at $6 billion. Earlier examples of prominent construction loans include Tishman Speyer’s $1.8 billion from Blackstone for The Spiral and Related Companies’ $1.6 billion for 70 Hudson Yards.
Vornado confirmed exercising an option for a 36 percent stake in the project, while Citadel and Rudin will hold 60 percent and 4 percent respectively, valuing Vornado's contribution at about $900 million. Approximately 1 million square feet will be occupied by Citadel. A 25 percent stake may be sold to another investor, and demolition is underway. Prospective tenants are looking for premium office space with expected rents around $350 per square foot. The 62-story project has received necessary permits following city zoning approval, amidst recent political tensions involving the project’s financing.
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M&T Realty Capital Corp. secured a $141.4 million bridge loan for Anagram Turtle Bay, a 194-unit multifamily community at 300 East 50th St. in Manhattan's Turtle Bay neighborhood. The financing, provided to an ownership group led by Global Holdings, MAG Partners, and Safanad, will refinance construction financing and support the property during lease-up and stabilization, with an option for a three-year extension.
Completed in 2025, the 23-story residential tower features a mix of apartments and retail space, along with amenities like gardens, a rooftop lounge, and a fitness studio, including an affordable housing component. Joe Pizzutelli of M&T emphasized the importance of bridge financing for newly delivered, high-quality multifamily assets. Josh Feder of Global Holdings noted that achieving full lease-up quickly reflects the strength of their vision for Anagram Turtle Bay and demonstrates the demand for well-designed, amenity-rich housing in Midtown East.
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New York’s real estate policies mirror the “defund the police” movement, aiming to reduce harm through simplistic strategies that ultimately diminish benefits. Public sentiment favors law enforcement's safety despite its flaws, leading to the decline of the defund movement. In contrast, initiatives to defund rental properties have gained traction to prevent rent hikes, resulting in the deterioration of buildings. The Housing Stability and Tenant Protection Act of 2019 significantly limited rent increases, which stifled individual and capital improvements in rent-stabilized apartments.
Many units remain empty due to these regulations, with landlords giving up on re-letting them. The recent two-year rent freeze further exacerbated the trend of below-inflation rent increases. Additionally, the processes for substantial rehabilitation have slowed, as stricter criteria hinder projects, while the requirement for Certificates of No Harassment extends timelines and complicates renovations. Delays incentivized by the Loft Law have added to the challenges. Consequently, upgrading occupied properties has become exceedingly difficult for landlords.
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Brookfield Properties is now rebranded as BGRE, signaling its growth as a top global real estate operator and developer. BGRE manages over 330 million s/f across various sectors in key markets worldwide, supported by a global workforce. The rebrand underscores a commitment to sustainable operations and strong partnerships, aiming to create thriving environments for work and living. While the company evolves, it retains the core values and long-term perspective established over 70 years. Business operations and personnel remain unchanged.
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The joint venture led by Cirrus and LCOR, which took over the Atlantic Yards megadevelopment, has signed a memorandum of understanding with Empire State Development. This agreement outlines the future of the project, which includes a $5 billion plan to construct 5,600 residential units across seven towers on six sites, increasing the original unit count by 2,382. Among these, 1,242 units are designated as below market rate, with ground-breaking anticipated in 2028. The name preference has reverted to Atlantic Yards, despite previous rebrandings to Pacific Park.
Previously, developers completed eight buildings with 3,212 units, including 1,374 affordable ones, under a prior agreement mandating the completion of 876 affordable units by May 2025, failing which they faced hefty fines. New developers, Cirrus and LCOR, must now meet revised deadlines without the threat of those previous penalties. Following the memorandum signed by July 31, environmental reviews will commence. The project faces challenges from decades of legal disputes, economic issues, and the complexities of construction on railyards, with funding for essential platforms remaining uncertain. The state has allocated $175 million toward the first platform, but total projected costs may reach $700 million.
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A common concern in negotiating a limited liability company (LLC) agreement for real estate projects is the need for additional capital, especially in development deals. Many LLC agreements include dilution clauses that adjust profit-sharing ratios if a member fails to contribute capital, raising questions about penalties and calculation complexities. A recent New York appeals court decision (DTI-DSIC, LLC v. 930-DSIC, LLC) offers insight into handling capital contribution defaults under Delaware law. The agreement allowed the managing member to force a defaulting member to sell its interest at a price the managing member deemed "fair and reasonable," using a promissory note payable from future distributions.
he courts upheld this remedy despite the payment method not being explicitly in the agreement. Key lessons for managing members include ensuring express remedies in the agreement with a "fair and reasonable" standard and the ability to pay through contingent notes. Non-managing members should consider mechanisms to ensure price determination involves third-party appraisals or accountants to safeguard against potentially biased pricing by the managing member. An all-cash price requirement may also provide additional protection. Overall, clarity in the LLC agreement can mitigate disputes regarding capital calls and member contributions.
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Larry Korman's AKA Hotels has acquired BlackRock's majority stake in a portfolio of three Midtown extended-stay hotels for $220 million. The properties, located at 330 East 56th Street, 123 West 44th Street, and 42 West 58th Street, had previously operated under AKA Hotels Residences, which provides long-term stays in fully furnished apartments. Korman, having owned a minority stake, consolidated ownership after BlackRock listed its share for sale amidst investor interest in converting the hotels to apartments. The portfolio's valuation exceeds $680,000 per key.
Korman Communities, founded by Larry and Brad Korman, controls a $4.7 billion real estate portfolio in the U.S. and London. The company previously sold its Smyth hotel in Tribeca for $41 million. Challenges for New York’s hotel industry include rising operating costs and pandemic impacts, with a law restricting new hotel development contributing to stable property values. A new union contract promises significant wage increases for hotel workers, potentially exceeding 50% over eight years.
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JPMorgan Chase is investing $750 billion through 2035 to support homeownership in the U.S. as part of its American Dream Initiative. The bank aims to finance one million affordable housing units and assist half a million people in buying homes. This initiative also focuses on supporting small businesses and expanding access to healthcare. Michelle Herrick, head of commercial real estate, emphasized the importance of a resilient housing market for economic growth and opportunity. JPMorgan plans to boost mortgage lending by over 40% and provide loans to 200,000 first-time homebuyers.
The initiative will back a new housing-affordability law that expedites federal environmental reviews and eases restrictions on manufactured homes. Additionally, JPMorgan has designated funding for housing projects in San Francisco, including nearly $200 million for a 342-unit residential building. Chief Executive Jamie Dimon supports these efforts, expressing concern about the American economy and wealth inequality. The bank announced plans to lend $80 billion to small businesses over the next decade, including assistance to community banks and investment funds.
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