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Weekly Market Report - January 30, 2023


SL Green reported a net loss of $93M for all of 2022, compared to a $434.8M profit in 2021. Its occupancy rate, including leases signed but not yet commenced, was 91.2% at the end of December, compared to 92.1% at the end of September. The publicly traded REIT said it signed 33 office leases across 196K SF in Manhattan during the fourth quarter, far fewer than it signed the previous quarter or in the fourth quarter in 2021. But SL Green CEO Marc Holliday said the firm had seen a busy January, kicking off what he expects will be a “pivot” year.

SL Green signed a total of 2.1M SF of leases in 2022, and executives said another 343K SF of leases have already been signed this year, including a new 15-year lease with 777 Partners, an alternative investment platform, which will be taking 18K SF at One Madison Avenue. But in the fourth quarter, the leases being signed were on average lower than in previous periods, showing the decline in demand for many of SL Green's older properties. Excluding deals at the firm’s trophy asset One Vanderbilt, SL Green signed leases in Q4 at an average rent of $69.70 per SF with an average term of eight years.

The tenant concessions were at an average of seven months free rent and an improvement allowance of $59.60 per SF. Major lease deals of the fourth quarter included AECOM’s renewal for 45K SF at 100 Park Ave., a downsizing from 109K SF the company previously leased at the building. The last few months of the year, typically a busy time of the leasing market, were muted across the city. Total leasing volume for Q4 in Manhattan was 4.42M SF, down 27% on the five-year quarterly average.

News of tech layoffs, a sector that had supercharged the office market in recent years in the city, overshadowed the start of the year. Amazon, for example, laid off nearly 300 people from multiple locations in the city this week, as part of its global staff reduction, and Google is laying off nearly 900 workers from its New York offices. Holliday said job losses weren't significant enough to take a real hit to the leasing market in New York City. His comments came a day after IBM, which signed a 328K SF anchor lease at One Madison last year, announced it would lay off 3,900 workers.


For one, the 1.8 million-square-foot GM Building just became the most valuable in the city with a market value of $1.9 billion — up 17 percent from a year ago. Its billable value increased by 6.4 percent to $796 million. For the lay reader wondering why the two values are so different and went up by vastly different amounts, understand that the city makes property taxes inscrutable. Perhaps the idea is to create jobs for accountants and tax certiorari lawyers, whom building owners routinely hire to challenge their assessments.

The city estimated gross income for the tower, 767 Fifth Avenue, at $304 million and its expenses at $65 million. It figured a base capitalization rate of 7.46 percent. The market value of the Empire State Building, once the city’s most valuable property, increased by nearly 10 percent to $993 million. Its billable value rose by 7.8 percent to $440 million. The iconic skyscraper has in recent years received an energy-saving overhaul, suffered a retail slump and enjoyed a revival, but also endured the pandemic’s wipeout of its observation deck revenue. Also of note in the tax roll, the luxury rental building at Blackstone’s 8 Spruce Street saw its assessment leap from $4.4 million to nearly $31.6 million.

Based on the current Class 2 apartment tax rate of 12.67 percent, the tax bill of the Frank Gehry–designed tower will go from $379,000 to $4 million. For the same reason, the Rockrose-developed 709-unit rental tower known as the Linc LIC at 43-10 Crescent Street in Hunters Point had its billable value boosted from $740,000 to $12.9 million, despite its market value dropping from $163.7 million to $137.3 million. This means its $90,700 tax bill this fiscal year will rise to $1.58 million starting in July. Opponents of the abatement program, which for new projects expired June 15, 2022, love to point out that it wipes out almost $1.8 billion in annual taxes, including at luxury buildings (available apartments at 8 Spruce run from $4,672 to $32,000 a month). They never mention how much is collected from buildings after their abatements end.

The new proposed value of all city property is $1.479 trillion, a 6.1 percent increase from the current fiscal year, which ends June 30. Taxpayers will be billed 4.4 percent more starting in July, but changes for specific properties depend on individual assessments and the city budget hashed out later this spring by the mayor and City Council. The tax roll reflects “mixed signs of growth and economic recovery,” said Finance Commissioner Preston Niblack, noting “improvements in subsectors of the residential market while key commercial sectors still lag behind pre-pandemic levels.” His summary: Office, retail and hotels are struggling, while single-family homes, which make up a majority of residential properties, “have exhibited a robust recovery.”


Wells Fargo financed a new, 1.4 million-square-foot office building in Flatiron, Michael Dell and Apollo got behind the nation’s largest office-to-resi conversion, and two lenders refinanced debt on office buildings in the CMBS market. A couple of residential projects also got financing: one multifamily development on the Upper East Side and a condominium near Billionaires Row. All told, lenders on the 10 largest deals parted ways with $2.4 billion last month — on par with amounts lent in the past two years.

The owners of One Madison Avenue, a 1.4 million-square-foot office redevelopment in Flatiron, secured $575 million in construction financing from Wells Fargo, which has originated $1 billion in loans for the project since 2020. A joint venture partnership among SL Green Realty, Hines and the National Pension Service of Korea, the project was estimated to cost $2.3 billion. Billionaires Row-adjacent | $170M. Rotem Rosen and partners landed $170 million in construction loans from Bank OZK for 126 East 57th Street, a condo development near Billionaires Row. Construction of the 180,000-square-foot project is underway with a completion date in 2025.

Rosen, Indian billionaire Anand Mahindra and Israeli developer Zahi Hagag bought the site at the southeast corner of East 56th Street and Lexington Avenue in 2019 for about $555 per built square foot. Hersel Torkian’s Torkian Group picked up a $145 million construction loan from Valley National Bank on a quarter-acre lot at 250 East 83rd on the Upper East Side. The mixed-use project, at the corner of Second Avenue, is expected to rise 32 stories and yield 240,000 square feet with 128 residential units. Torkian bought the parcel in 2005 for $8 million. Publishing magnate Peter Brant refinanced his 140,000-square-foot office building at 575 Broadway in Soho with $127 million from Citi Real Estate Funding and Societe Generale. The loan replaces expiring CMBS debt.


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