Weekly Market Report - May 14, 2026
- 4 days ago
- 9 min read
***
9 W. 57th St., recognized by credit-rating agency S&P Global as one of New York City's most recognizable office buildings, is a major player in the Manhattan real estate landscape. Owned by Soloviev Group, the 50-story tower is positioned to generate $526 million through mortgage refinancing, marking one of the largest payouts for a Manhattan office landlord. Only Tishman Speyer’s near $1 billion refinancing for a Hudson Yards tower in the previous year surpasses it. The disparity in office rents in Manhattan is widening, with an increase from a 14% to 25% rental gap between Class A and Class B buildings over the past two years.
The recently announced refinancing involves a new $1.8 billion loan—$600 million more than its previous mortgage—and reflects an appraisal of $3.5 billion. The building is 92% occupied, featuring major tenants like Apollo Global and Chanel, with a tenant reportedly paying $340 per square foot, believed to be the highest in New York. Soloviev has invested over $50 million in renovations, enhancing amenities including an art gallery showcasing works by Cezánne and Picasso, continuing his father's legacy in this important asset.
***
Twenty-five years after 9/11, rental prices for large spaces at the World Trade Center approach those on Midtown's prime avenues, according to a Post survey. With Moody’s departing 7 WTC at the end of 2027, Larry Silverstein anticipates rents to reach $140 per square foot for 700,000 square feet, as stated by executive vice-president Jeremy Moss. The current availability of Moody's represents a significant opportunity, reflecting a 30% rent increase since the pandemic. Moody's lease began at mid-$50s per square foot two decades ago, rising to the $70s, now significantly lower than potential current values. Despite downtown office rents being about 25% less than Midtown's, recent leases at Silverstein's buildings exceeded $100 per foot.
Meanwhile, the Durst Organization is seeking $160 per square foot for penthouse floors at 1 WTC, with lower floors priced in the mid-$80s to $90. The area is seeing revitalization, with underground work commencing on the new 2 WTC for American Express. The existing towers, including 1 WTC, boast over 95% occupancy compared to Manhattan's 85% and downtown's 80%. Mary Ann Tighe, representing Silverstein, noted the site's appeal to companies seeking new offices near mass transit, fostering growth among financial, tech, and legal firms. Professor Mitchell L. Moss commended the WTC as a symbol of New York City's resilience and transformation post-attack.
***
Edikted, a West Coast-based Gen-Z fashion brand, has leased 12,865 square feet in the landmarked Scribner Building at 597 Fifth Avenue for its second NYC store. The building was purchased by Bobby Cayre’s Aurora Capital for $54 million through a foreclosure sale, with the lease already secured when the acquisition occurred. While the duration and rent of Edikted’s lease remain unspecified, retail rents along Fifth Avenue averaged $575 per square foot in Q1 2026, according to CBRE. Dan Harroch of DH Real Estate Advisors represented Edikted in the deal.
The Scribner Building features a storefront with a ground floor, lower level, mezzanine, and balcony, showcasing Beaux Arts design elements from 1913. Landmark status was granted in 1982 and extended to the interior in 1989 after the bookstore’s closure. Ownership changed hands several times since, with Thor Equities acquiring it in 2011 for $99 million. The brand, which influences pop culture and style, has an existing SoHo location and is launching a Barbie-themed pop-up in Los Angeles soon. Timeliness for the holiday opening remains uncertain.
***
Handful of large leases account for submarket’s 45 percent of demand
In April, Midtown South dominated the Manhattan office leasing market, securing four of the five largest leases and accounting for nearly 45 percent of total leasing demand, which reached 1.6 million square feet—65 percent above the 10-year monthly average. Key transactions included a 125,000-square-foot sublease by AI healthcare company Tennr at 345 Hudson Street, alongside a 99,000-square-foot lease by trading platform Jump Trading at 50 Hudson Yards and a 94,000-square-foot lease by tech firm Sierra at 11 East 26th Street, although confirmation from landlords was pending.
Overall, Manhattan saw 3.6 million square feet leased in April, a 38 percent decline from March but still 30 percent above the 10-year average. The availability rate dipped slightly to 13.4 percent, with total available space down to 69.9 million square feet, the lowest since October 2020 and nearly 29 percent below the post-pandemic high. Sublet space also decreased, dropping to 10.5 million square feet, its lowest since 2019. Downtown leasing surged to 851,000 square feet, primarily driven by Cleary Gottlieb Steen & Hamilton’s 475,000-square-foot lease at One Liberty Plaza.
***
Cleary Gottlieb’s 475K sf deal at One Liberty Plaza may be a downsizing
A 475,000-square-foot lease for Cleary Gottlieb Steen & Hamilton at One Liberty Plaza in Manhattan indicates a potential downsizing rather than growth. Although specific lease length and rent details were not disclosed. The average asking rent in Lower Manhattan was $62.21 per square foot. While the law firm expressed satisfaction with the new space, it has decreased from its previous lease of 550,000 square feet signed in 2007, suggesting a 75,000-square-foot reduction. Other tenants in the 54-story building include Business Insider and Chaves & Perlowitz. In April, Manhattan office space leasing totaled 3.6 million square feet, a 38 percent decline from March but still 30 percent above the 10-year average. Brookfield Properties refinanced the building with a $750 million loan in 2024.
***
Parkinson’s research nonprofit taking 69K sf in Midtown
Michael J. Fox’s nonprofit is relocating its headquarters to 530 Fifth Avenue in Midtown Manhattan, occupying 69,000 square feet, according to the Commercial Observer. This move marks a downsizing from its previous 86,000-square-foot space at 111 West 33rd Street, where it has been for a decade. The lease terms and asking rent, reportedly around $80 per square foot as of January 2025, were not disclosed. Other occupants of the 26-story property include Cyprus Creek Renewables and the New York City Police Foundation. Recent developments at the property include Sagehall becoming equity partners at the building, injecting $70 million while securing a $110 million loan facility. Additionally, RXR is involved in a $269 million refinancing deal for the Hamilton Green complex in Westchester County.
***
CBRE officials, including CEO Robert Sulentic, are assessing the potential impacts of AI on their workforce, noting significant job reductions in specific areas such as call centers and research. Sulentic mentioned a possible 25% reduction in call center personnel and emphasized that while efficiencies will improve, top brokers’ roles, reliant on creative and strategic thinking, won't be replaced. The firm, which has over 150,000 employees and generated $10.5 billion in revenue and $6.5 billion in debt , sees itself as "reasonably well protected" against AI disruptions.
Despite fears regarding AI's impact on the workforce affecting CBRE's stock price—down by a sixth since AI anxieties spread—Sulentic noted that demand for office leasing remains stable, with long-term deals continuing at consistent lengths. While the company anticipates a future with fewer employees in certain divisions, they face challenges in hiring skilled personnel in vital sectors like critical infrastructure. Sulentic highlighted that CBRE is not alone in this struggle for talent, a common issue across the industry. Current rankings show CBRE leading the New York commercial real estate market with 811 brokers, ahead of JLL $2.59 billion debt and Cushman & Wakefield $2.99 billion in debt.
***
The Paramount Group has dropped from Crain’s “Largest Commercial Property Managers in New York City” list, having managed 8.7 million square feet last year, now overshadowed by its acquisition by Rithm Capital Corp. for $1.6 billion. Once a leading Midtown landlord of Manhattan Class-A properties, it notably managed the building featured in "Seinfeld." Following the acquisition, long-serving CEO Albert Behler received a $34 million exit package. Rithm Capital, previously ranked 14th, maintained its 9.2 million square feet managed on Crain’s 2026 list. Columbia Property Trust emerged in the top 25 with 3.4 million square feet, while AI marketing platform Bluefish opened a 17,000-square-foot office at its 315 Park Avenue South property.
***
Ken Griffin’s plan for the 350 Park Ave. office tower appears to be moving forward, despite tensions with Mayor Zohran Mamdani, who criticized Griffin in a recent tax push video. The project's fate became contentious after Mamdani highlighted Griffin’s expensive penthouse as a focus of his proposed pied-à-terre tax. This upset Griffin and led to speculation about halting the project, which would cost $6 billion and be nearly 2 million square feet. However, a recent disclosure from Vornado Realty Trust revealed that Griffin secured a $400 million loan for 350 Park just before Mamdani’s video, signaling a commitment to the project. Analysts suggest this move indicates progress, and demolition work has already commenced. Vornado CEO Steven Roth defended Griffin against Mamdani's comments, calling them “irresponsible” and asserting that Citadel’s commitment is essential for the project, but he is confident it will proceed. If Griffin does withdraw, Vornado and Rudin can sell their stakes back to him until July at a $1.2 billion valuation.
***
Major League Soccer (MLS) has expanded its headquarters by moving into 126,000 square feet at 2 Penn Plaza, located in Midtown Manhattan. This new space occupies the 14th and 15th floors and includes the league’s Match Day Center Operations Hub, featuring over 80 meeting areas, real-time match data, immersive displays, and a central trophy installation. The office design, by TPG Architecture, aims to resemble a stadium. Previously, MLS operated from a 95,000-square-foot location at 420 Fifth Ave. The relocation allows MLS to access amenities closer to key transportation links while capitalizing on a favorable market opportunity.
Though MLS did not disclose lease specifics, average office rents at 2 Penn Plaza range from $78 to $96 per square foot. The move coincides with the upcoming World Cup, which will see MetLife Stadium, rebranded for the event, host eight matches, including the final on July 19. The excitement surrounding the tournament is expected to enhance the sport's visibility in the area. MLS will share the building with other prominent companies, including Madison Square Garden Entertainment and Universal Music Group.
***
A Canadian pension fund and foreign investors have incurred losses of approximately $120 million on 1 Willoughby Square, Downtown Brooklyn’s tallest office tower. Despite its 2021 opening being positioned as a recovery milestone by Mayor Bill de Blasio, the building remains 40% vacant, surpassing Downtown Brooklyn's average. Following a $125 million refinancing effort, its appraised value plummeted to $190 million from an investment exceeding $450 million. La Caisse, the pension fund, wrote down $55 million on a $235 million construction loan.
EB-5 investors lost $65 million on nearly $100 million worth of mezzanine loans but swapped debt for a lien on a Poconos property. JEMB Realty, the developer, agreed to inject $65 million in cash and secured new partners, Averroes Partners and KSR, who received 24.5% of distributions while contributing nominal investments. This infusion facilitated a new five-year mortgage with Deutsche Bank, utilizing the occupied lower half of the building as collateral, while the upper floors remained unaddressed in the deal.
***
A new multipurpose restaurant, Cucina, by Casa Tua, is set to open in Downtown Brooklyn at 1 Hanson Place next year. The 30,000-square-foot space will occupy three stories within the historic Williamsburgh Savings Bank Tower, featuring open kitchens, aperitivo bars, and fine goods markets. This marks Cucina's first Brooklyn location, which will include a lounge, private dining, and event spaces. Casa Tua plans to reveal additional hospitality and dining offerings soon. The restaurant aims to respect the landmark's heritage and contribute to Downtown Brooklyn's growth as a cultural and entertainment hub, bolstered by a recent residential boom. Brooklyn Sports & Entertainment, which acquired the building for about $10.3 million, views this expansion as a strategic move to enhance fan experiences beyond the nearby Barclays Center.
***
Scott Rechler, CEO of RXR and Federal Reserve Bank of New York board member, stated at a conference that overinvestment in artificial intelligence (AI) is distorting the economy and driving up interest rates. He noted that the significant funds being directed towards AI projects limit available capital for housing development, creating an imbalance in real estate investment. Rechler described the AI boom as "frothy and dangerous," highlighting risks in speculative data center developments lacking committed tenants, which are treated as infrastructure despite execution risks.
This influx of borrowing has raised U.S. government bond rates, thereby increasing borrowing costs across the economy. He anticipates more corporate bond issuances than Treasury ones due to the digital infrastructure demand, which raises competition for dollars and interest rates. Despite skepticism about AI investment, Rechler values AI’s utility in property monitoring and project tracking. He emphasized the need for accelerated AI adoption in his firm while warning that only a small percentage of AI companies may survive in the coming years. Rechler's past success in real estate and investment strategies suggests caution, yet he acknowledges the AI frenzy's influence on rising development costs for commercial and residential projects.
Comments