Weekly Market Report - January 13, 2026
- Broker Support
- Jan 15
- 11 min read
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The lender cites rising investor appetite for funds that back nonbank loans for multifamily properties
Benefit Street Partners has raised $3 billion for its latest real-estate focused fund, the Benefit Street Partners Real Estate Opportunistic Debt Fund II, which includes co-investment vehicles and provides $10 billion in investable capital with leverage. This represents a significant increase from the previous fund, which had around $1.5 billion in investment capacity in 2022. Michael Comparato, a senior managing director, noted a recent surge in institutional interest in commercial real-estate credit, indicating a shift in allocation strategies. The new fund has substantial backing from international institutional investors, with nearly half from the Asia-Pacific, 30% from North America, and almost 20% from Europe, the Middle East, or Africa.
The strategy mirrors its predecessor, emphasizing U.S.-based commercial and multifamily residential assets, particularly in low- or no-tax states like Florida, Texas, and Tennessee. However, some challenges include increased occupancy issues due to deportation actions affecting resident stability. Benefit Street has deployed about 40% of the fund, recently financing a multifamily property in Jersey City, where design changes were made during construction. The firm, part of Franklin Templeton, manages $91 billion in assets and has been a real estate lender since 2013.
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Bondholder group offers $1.25 billion of bankruptcy financing with aim to take control
The parent company of Saks Fifth Avenue and Neiman Marcus is nearing a $1.25 billion bankruptcy financing package as it plans to file for bankruptcy imminently. A bondholder group led by Bracebridge Capital and Pentwater Capital has proposed a debtor-in-possession loan of $1.25 billion to fund the Chapter 11 proceedings and is expected to assume control of the company, while also stipulating the termination of the current management team. Pacific Investment Management Company (Pimco) has countered with a $1.5 billion loan proposal. Sales fell 13% year-over-year in the recent quarter to $1.6 billion, with a net loss of $288 million. The company has struggled to pay vendors due to declining sales and missed a $100 million debt payment in December. The resignation of CEO Marc Metrick followed, with Richard Baker taking over. Additionally, a fraudulent returns incident involving a stylist has compounded Saks’ public relations challenges.
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As 2025 concludes, early market data indicates a shift back to landlords in Manhattan’s office market, with companies leasing approximately 43M SF, marking a 20% increase from the previous year and the highest volume since 2014. The availability rate decreased to 13.9%, influenced by over 2.1M SF being removed for conversions. This year is hailed as pivotal in the market's recovery, with tenant demand nearly matching pre-pandemic levels. Particularly, trophy space availability in Midtown dropped to 3.4%, prompting a 12% rise in asking rents to $191 per SF.
Class-B rents reached a record $68.61, reflecting a 1.1% quarterly increase. Although overall rents remain slightly below pre-pandemic averages, they rose 3.5% year-over-year. Notably, 70% of Q4 leases were for trophy and Class-A buildings. Downtown activity surged, led by significant deals with firms like Moody's and growing tech firm leases in Midtown South. Despite concerns over high interest rates, optimism exists for sustained momentum into 2026 as new constructions commence and sublease offerings decline significantly.
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Q4 marked highest yearly total since 2019
Manhattan office leasing concluded last year with a robust performance reminiscent of pre-pandemic levels, marking its strongest quarter since 2019. Demand surged, availability tightened, and rents increased across the city. In the fourth quarter, leasing activity rose over 25 percent quarter-over-quarter, totaling 11.9 million square feet, the borough's highest since late 2019. For the entire year, tenants signed nearly 42 million square feet of deals, the highest since 2019, reflecting a 26 percent increase from 2024. Notable transactions included Bloomberg’s 496,000-square-foot renewal at 120 Park Avenue and Moody’s 460,000-square-foot lease at 200 Liberty Street.
Class A buildings garnered over 74 percent of leasing activity, highlighting the flight-to-quality trend. The availability rate in Manhattan decreased to 13.9 percent, the seventh consecutive quarter of stable or declining availability, with sublet space reaching its lowest since 2019. Average asking rents increased to $76 per square foot, the highest since October 2020, while Class A rents rose to $83 per square foot. Midtown led in leasing volume, with significant growth in Midtown South and Downtown. The financial services, insurance, and real estate sectors were the most active, constituting 37 percent of leasing activity.
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REIT sold minority stake to Rockpoint at $425M valuation
SL Green has initiated plans to sell $2.5 billion in property, recently selling a minority stake in the office building at 100 Park Avenue to Rockpoint for $425 million. The firm, led by Marc Holliday, had previously acquired a 49 percent stake from Prudential at a $360 million valuation in December 2024, enhancing the property’s value before this recent sale. The building, a 1940s structure near Grand Central, boasts a high occupancy rate of 95 percent, and both partners will provide additional funds for leasing costs. SL Green engaged Alvarez & Marsal for 220,000 square feet, with associated costs beginning to accrue.
The property's capitalization is projected to reach $500 million once all investments are realized. This transaction signifies the resilience of Manhattan’s office market, which is expected to perform well in 2025 as employees return to workplaces. In response to elevated interest rates, SL Green is strategically offloading assets, as noted by CFO Matthew DiLiberto. Additionally, the REIT aims to pursue approximately $1 billion in acquisitions by 2026. Meanwhile, Rockpoint has been active, having recently sold its One Dag Hammarskjöld Plaza tower for $270 million.
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Prominent Midtown office landlord Charles Cohen is in need of approximately $200 million to resolve a debt with Fortress Investment Group. He has made progress towards this goal by selling 3 E. 54th St. to Vornado Realty Trust for $141 million. Vornado plans to demolish the 280,000-square-foot property and build a new project of up to 230,000 square feet without city review. This sale will generate over $30 million to help Cohen's lenders, alongside another recent sale of 623 Fifth Ave. for $218 million, which carries estimated proceeds of about $70 million after taking into account its $146 million debt.
Cohen's financial situation has deteriorated, with a judge ruling that he owes $187 million guaranteed to Fortress. The legal conflict has seen allegations of asset shielding against Cohen, including transfers of his personal residence and yacht. His next target for sale is 622 Third Ave., a 1 million-square-foot property valued at nearly $700 million but carrying $400 million in debt. There is a significant disparity between Cohen's property valuations and their market selling prices, as illustrated by the sales of both 623 Fifth Ave. and 3 E. 54th St., which sold for far less than Cohen's valuations.
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SL Green, RXR ask judge to block Extell’s UCC sale tied to Midtown tower
SL Green and RXR, owners of Worldwide Plaza, are in a legal dispute with Gary Barnett's Extell Development over a UCC sale concerning the 1.8-million-square-foot office tower at 825 Eighth Avenue. They have filed a lawsuit in Manhattan Supreme Court, alleging that Barnett is orchestrating a “sham auction” to gain control of the $940 million CMBS senior mortgage through a rigged foreclosure. Barnett claims ownership of a $190 million mezzanine loan and has announced an auction for controlling equity, but the landlords assert Extell has failed to demonstrate legitimate ownership of this loan despite requests.
They accuse Barnett of using the foreclosure process not to recover debt but to strengthen Extell's position in the restructuring negotiations, claiming a vested interest in the bonds connected to the property. They argue the sale's structure is designed to deter other bidders, citing a rushed timeline and restrictive terms. With occupancy rates declining—down to 63% as of March 2023 from 91% in 2023— and significant impending tenant reductions, the property was appraised at just $345 million in April, an 80% drop from 2017's $1.7 billion valuation, threatening $500 million in losses to CMBS bondholders. Morningstar has downgraded the property’s CMBS rating to junk status. Negotiations for loan modifications are taking place.
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BXP has secured a significant lease with Starr, an investment and insurance company, for 343 Madison Ave., establishing an anchor tenant at the property. The 20-year lease encompasses approximately 275,000 square feet, covering the 16th to 27th floors of the 46-story building, which will serve as Starr's New York headquarters. The overall tower will span 930,000 square feet and provide direct access to Grand Central Terminal, with completion expected in late 2029. The project, costing around $2 billion, began construction without an anchor tenant and follows a strong recovery in Manhattan's office market, where nearly 42 million square feet were leased in 2025. Although the asking rent remains undisclosed, top office rentals in Manhattan can reach $300 per square foot. BXP is still in search of a new partner after the withdrawal of Norges Bank.
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SL Green is securing a $480 million mortgage for its acquisition of Park Avenue Tower, highlighting the risks associated with premier office buildings post-pandemic. The city’s largest office landlord is expected to make a nearly $270 million down payment to secure the loan for the 600,000-square-foot tower, which hosts notable hedge funds and financial firms as tenants. The new five-year loan will help finance SL Green's $730 million purchase of the 36-story tower from Blackstone Group, which recently invested $180 million in renovations. S&P Global notes the building is 97% occupied, with high ceilings being a unique feature for Park Avenue.
Despite an increase in vacancy trends in Manhattan, the location's scarcity and high demand maintain strong rental rates. However, this new mortgage also reflects lenders’ view of premium properties as relatively risky investments amid the ongoing effects of Covid-19. SL Green’s down payment of 36% surpasses Blackstone's earlier 28%. Additionally, SL Green has begun selling properties, recently selling a 49% stake in 100 Park Avenue for $425 million and is targeting $2.5 billion in property sales. Industry confidence remains strong with expected increased transaction activity by 2026.
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Rialto Capital provided latest debt at 100 Fifth Avenue
Sovereign Partners successfully refinanced its asset at 100 Fifth Avenue with a $150 million loan from Rialto Capital, as reported by the Commercial Observer. The Sakhai brothers, Cyrus and Darius, acquired the 20-story office building in 2023 for $126.5 million, significantly less than the $230 million paid by Clarion Partners a decade earlier. Under Sovereign’s management, the 277,000-square-foot property achieved full occupancy, securing 170,000 square feet of new leases, with Adobe as the main tenant. Recently, the Sakhais also completed a $273 million acquisition of 2 Grand Central Tower from Rockwood Capital, equating to $409 per square foot. This transaction came after Rockwood previously attempted to sell the tower for nearly $580 million in 2020, following their earlier purchase for $401 million in 2011 from Boston Properties. Rialto Capital Management, known for aggressive servicing practices, is the largest buyer of CMBS B-piece notes, which allows them to influence loan servicer selection.
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Co-op shareholders facing 450% increase in ground rent
Co-op shareholders at Carnegie House faced a setback when the New York County Supreme Court ruled in favor of landowners Rubie Schron and David Werner regarding a ground lease dispute. The court upheld a significant rent increase for the property, raising annual ground rent from $4.36 million to about $24 million, affecting payments for hundreds of shareholders. Carnegie House board President Richard Hirsch criticized the rent hike as detrimental to middle-class residents amidst a housing crisis, stating that his monthly costs could rise from $5,000 to $13,000.
While landowners expressed willingness to assist permanent residents needing rental aid, tensions escalated as the lease, which expired on March 15, was renewed without a mutual agreement on terms. Initial rental negotiations began at $40 million, whereas the co-op countered at $5.4 million, later increasing to $5.45 million. A lawsuit attempting to halt negotiations was dismissed. If Carnegie House fails to meet lease terms, the building could revert to rent-stabilization, jeopardizing shareholder equity and leaving them with mortgage obligations amid declining unit values that fell below market rates. Schron and Werner acquired the land in 2014 for $261 million.
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Rilla inks 57K sf lease at Williamsburg waterfront development
An AI startup, Rilla, is relocating from Long Island City to a 57,000-square-foot penthouse lease at Global Holdings' 25 Kent in Williamsburg. The deal, one of the largest office transactions in Brooklyn this year, involves Rilla occupying the entire eighth floor and nearly 4,000 square feet of private outdoor space. This 10-year lease increases the building's occupancy to 72%, with an asking rent of $76 per square foot. Rilla's CEO, Sebastian Jimenez, announced a housing stipend to cover up to $1,500 per month for employees living near the new office.
The company currently employs 160 staff members and operates on a 9-9-6 work schedule. Jimenez plans to relocate to Williamsburg, while employees have the option to move closer to benefit from the stipend. The lease represents a positive development in Brooklyn’s office market, which has struggled with vacancy rates amid new construction. Rilla's move contributes to the borough’s growing reputation as a technology hub, alongside significant developments like the Refinery at Domino and 25 Kent.
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The Renaissance Charter School network has acquired its Elmhurst building at 45-20 83rd St. for $85 million, as confirmed by city records. The sale was finalized by Daniel Fanelli, representing the Friends of the Renaissance Charter Schools, from the Long Island-based Barone Management, which constructed the 67,000-square-foot facility in 2022. The Elmhurst site serves as Renaissance's second location in Queens, complementing its first campus in Jackson Heights, established in 1993 and chartered in 2000.
The Elmhurst property includes 39 classrooms, a 6,000-square-foot gym, a 3,000-square-foot cafeteria, a 1,200-square-foot outdoor courtyard, and over 7,500 square feet of rooftop terraces. The acquisition was funded through bond sales managed by Baird Public Finance Group. Stacey Gauthier, Renaissance's executive director, is also noted as the signatory for a lease of the building until 2080. No comments were received from either Renaissance or Barone Management at the time of reporting.
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Nation’s capital converts more offices to apartments than almost anywhere else
Washington, D.C., is becoming a leader in converting outdated office spaces into housing, with over 6,500 residential units planned from office building transformations, second only to New York City. This surge is driven by a large stock of obsolete offices and government incentives. Developer Post Brothers will launch a $750 million conversion, creating 530 rental apartments from two buildings near Dupont Circle.
The project relies on a significant loan associated with energy upgrades, allowing Post Brothers to secure financing after banks struggled to develop a deal. Nationally, there are over 70,000 conversion units in progress, tripling from 2022, as demand for conversions grows amid rising office vacancies post-pandemic. However, challenges persist, including financial gaps and design constraints limiting potential conversions. While Washington's office vacancy rate reached 22.8%, partly due to weak federal return-to-office strategies, Mayor Muriel Bowser implemented zoning changes and incentives to facilitate these conversions. Political uncertainties and projected federal job cuts add risks to the downtown recovery.
Despite these economic challenges, efforts to diversify the local economy in tech, healthcare, and education sustain a belief in strong housing demand. Post Brothers faced setbacks in securing financing but eventually closed significant loans to support their project. C-PACE financing offers property-tax-like assessments to promote energy efficiency and resilience, making it a viable option for many conversions as they involve necessary system upgrades, suggesting ongoing potential for similar projects across the country.
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