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NBC CEO Jeff Shell pumped the brakes on a deal Wednesday to add another 90,000 square feet to the network’s existing footprint from Tishman Speyer at its storied Rockefeller Center address in Midtown, according to multiple sources close to the deal. This doesn’t mean that NBC is leaving 30 Rock, of which it already owns a significant portion via a commercial condo arrangement; the deal in question was for vacated “growth space.” While one source said “the deal is not dead,” other sources said that NBC is walking away from the deal.
This came, one source speculated, after Shell questioned whether the space would be usable in the current work-from-home climate. Indeed, this is a big question that many companies face today; earlier on Wednesday it was revealed that Elon Musk had told Tesla employees that he expected them to log 40 hours per week in the office or find another job. But the fact that NBC would walk away from a deal at 30 Rock, an address that the network is so closely associated with that it became the title of Tina Fey’s sitcom, is surprising.
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Commercial real estate is showing the first signs of cooling in more than a year, disrupted by rising interest rates that are already causing some deals to collapse. Property sales were $39.4 billion in April, which was down 16% compared with the same month a year ago. The decline followed 13 consecutive months of increases. Property sales tanked sharply during the early months of the pandemic, when thousands of hotels temporarily closed and furloughed staff, nonessential retail stores closed, and offices emptied out in favor of remote work.
A rebound began in late 2020, as investors took advantage of low interest rates and started to buy in anticipation of an eventual rebound. Demand for multifamily and industrial properties in particular helped fuel commercial sales through 2021 and into this year. The success of those sectors outweighed the drag on property markets caused by underperforming office buildings, which continue to be hurt by remote work. Now, some analysts are starting to ask whether the rally is running out of steam. Hotels, office buildings, senior housing and industrial properties recorded big drops in sales last month.
April’s 16% decline in sales marked an abrupt turn from March, when total commercial property sales rose 57% from the same month a year before. Surging interest rates in recent weeks have left many investors with a choice between losing their deposit or paying much more than expected for their mortgage.
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The Hilton Times Square was purchased by Apollo Global Management and hospitality investor Newbond Holdings, people familiar with the deal told the Wall Street Journal. The investors agreed to buy the property for roughly $85 million, only slightly more than one-third of its $242.5 million sales price from 2006. The deal for the property is expected to close this summer. Once it does, the owners hope to have the hotel at 234 West 42nd Street up and running by the fall. Apollo and Newbond, co-founded by Neil Luthra, also plan to invest in upgrades for the rooms and lobby.
The 478-room hotel was an early casualty of the pandemic, submitting paperwork to close permanently in September 2020. The hotel first shut its doors because of the pandemic in April 2020. Its closure resulted in the permanent laying off of 200 employees. The hotel’s owner Sunstone Hotel Investors didn’t make payments on its $77.2 million mortgage from April to September, but mortgage payments were held up prior to the pandemic. The California-based REIT also stopped making rent payments on its ground lease in March, setting the stage for a “negotiated transfer” of the property to another party.
At the beginning of 2021, the owner surrendered the 44-story property to Torchlight Investors, the special servicer of the mortgage. They agreed to a lease in lieu of foreclosure. At the time, the hotel was valued at $61 million. The owners are looking to revive it at an optimistic time for the sector, which is still reckoning with recovery efforts after its pandemic-driven downturn. NYC and Co. is projecting a surge in tourism this year, forecasting 56 million visitors to the city, up from 22 million in 2020.
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SL Green on Monday announced the sale of the vacant condo for $100.5 million. SL Green didn’t disclose the buyer, only referring to them as a “domestic investor.”The purchase hasn’t closed yet, but the landlord said it was expected to later this month. SL Green repositioned the building at the corner of Fifth Avenue and 49th Street in recent years, adding elevators and relocating the building’s lobby. In May 2020, London-based billionaires David and Simon Reuben closed on the purchase of the building’s retail condo from SL Green for $168 million. At the time of sale, the condo was leased to Puma and the office landlord was still reportedly looking to sell the entire 13-story building.
WeWork leased the entire 139,000-square-foot office condo in 2018, planning to begin its occupancy in November of that year. Asking rent for the space was reportedly $85 per square foot. The co-working giant didn’t last long at the property. Last year, the two sides agreed to terminate the lease due to the pandemic. SL Green scored an $11.4 million settlement from WeWork for the balance of the lease.The building was previously owned by Jeff Sutton’s Wharton Properties until 2003. When SL Green took ownership, it split the 168,000-square-foot property into the two separate condos.
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