Weekly Market Report - September 16, 2025
- Broker Support
- 18 minutes ago
- 12 min read
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Democrat’s big lead in polls causes some property owners to seek common ground on property-tax changes and faster building approvals
Real-estate figures in New York City are adapting to the likely victory of Zohran Mamdani in the upcoming mayoral election following his primary win. Instead of opposing him, many property owners are seeking collaborative opportunities. Executives are exploring policy compromises, particularly on housing agenda aspects like building approval fast-tracking and property tax reforms. Some met directly with Mamdani, aiming to establish connections. While challenges remain, including Mamdani's proposed rent freeze on stabilized apartments, real-estate leaders are focusing on potential areas for cooperation. Community engagement has increased, with proposals to adjust property taxes being shared. Despite some executives still hoping for a two-person race with Andrew Cuomo, many are recognizing the necessity of working with Mamdani’s administration.
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Office REIT BXP has announced a nearly 30% dividend cut, reducing it from 98 cents to 70 cents, which will generate about $50M per quarter. This decision aims to fund development projects and de-leverage the company, with plans to sell nearly 30 noncore assets to raise roughly $2B. CEO Owen Thomas stated that the sales will provide capital for a New York office tower project at 343 Madison Ave and improve shareholder value. BXP's strategy emphasizes leasing its properties, developing multifamily units, and seeking private equity partnerships.
The REIT intends to retain focus on central business district trophy offices while divesting suburban assets and expanding in key markets like New York, Boston, San Francisco, and Washington, D.C. BXP is poised to sell various properties, including 12 plots of land expecting $400M in returns and four multifamily properties anticipated to yield over $500M. Although the office sales may dilute returns, the overall impact on funds from operations is projected to be neutral. BXP seeks to introduce a capital partner for the 343 Madison Ave project after starting construction to avoid losing its lease. Despite challenges in the suburban office market, BXP is committed to investing strategically in the evolving office landscape.
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August saw second straight monthly increase
The CMBS market has reached an unprecedented level of distress, with rates soaring to 11.8 percent in August, surpassing the prior peak of 11.5 percent in January. This marks two consecutive months of increases and three rises in four months, reflecting mounting difficulties for landlords regarding maturities, occupancy, and refinancing. Delinquencies rose to 9.44 percent, while the special servicing rate reached 10.95 percent, with loans past maturity reaching $38.8 billion. Alarmingly, 41 percent of these loans are non-performing. Current loans declined to 13.7 percent, and late but not yet delinquent loans total $3.8 billion. An example is a $61 million loan for the Estates at Palm Bay, which became delinquent despite decent occupancy. Although alarms are sounding, the CMBS market remains active, with $59.55 billion in debt issued in the first half of the year, a 35 percent increase from last year.
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NBCUniversal has mandated that employees return to the office from Monday to Thursday starting in January, with a severance package option available for those who prefer to leave. This decision aligns with a broader trend among major companies pushing for in-person attendance to bolster the struggling commercial property sector. The severance offer includes eight weeks of salary, three months of healthcare, and full bonuses for those who continue working through December 31.
This policy applies to all U.S. and UK employees below the vice president level. NBCU, headquartered in Rockefeller Center and managing significant real estate, emphasized the importance of in-person collaboration for innovation and connection. This announcement follows similar mandates from other media companies, including Paramount, which will require daily office attendance starting in January. As of July, 54% of employees at Fortune 500 companies were under such mandates, with JPMorgan Chase and Amazon among those implementing full-time office requirements earlier this year.
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The office building at 225-233 Park Ave. South in the Flatiron District is set for a revitalization as its owner, Orda Management, has modified the mortgage of a $235 million loan, expected to exit special servicing after 18 months. The building, suffering from a 60% vacancy rate following tenant departures like Meta Platforms and BuzzFeed, entered special servicing in March 2024 due to a significant decline in net operating income, which was 85% below pre-pandemic levels.
While specifics of the mortgage modification are unclear, there are indications that Rexmark, the mezzanine lender, may contribute cash or acquire an ownership stake. Despite challenges faced by many pre-war buildings leased to tech firms, the Midtown South market shows signs of recovery, with the nearby 1 Madison Ave. redevelopment boosting tenant demand. This year, the Madison Avenue/Union Square area recorded a net absorption of 200,000 square feet, contrasting with last year’s loss of 660,000 square feet, indicating a positive shift in the market dynamics.
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SL Green’s credit outlook has improved following positive assessments from S&P Global and Fitch Ratings, recognizing the developer's efforts to reduce its debt burden. S&P upgraded SL Green’s outlook to “stable” from “negative,” highlighting modest improvements in key credit metrics over the past year, while Fitch raised its outlook to “positive” from “stable.” Both agencies maintained sub-investment grade credit ratings; S&P at BB and Fitch at BB+.
After concerns regarding SL Green's ability to manage its $10 billion debt amidst a weak office-leasing market, the situation has shifted as leasing activity and occupancy rates have risen. SL Green has also generated cash by divesting assets, such as the Giorgio Armani Residences and part of the tower at 1 Vanderbilt. Consequently, its debt levels fell from 13.3 times operating earnings to 11.3 as of June, with further improvements expected. CFO Matthew DiLiberto attributed the favorable outlooks to momentum in the New York office market and proactive strategies to strengthen the company's credit profile.
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Office giant leans into resi, taps 485x as it retools Midtown portfolio
Vornado Realty Trust is moving forward with plans for a rental tower near Penn Station, investing approximately $350 million to construct a 475-unit apartment building at the northeast corner of West 34th Street and Eighth Avenue. The project will utilize New York’s 485x program, offering tax incentives for affordable housing, although the number of income-restricted units is yet to be disclosed. This site is crucial to Vornado’s long-term plans for the Penn District, which faced delays during the pandemic, prompting calls from officials for a greater emphasis on residential development over office space.
Vornado has already invested $1.2 billion in upgrading Penn 1 and Penn 2 and has proposed a pedestrian bridge between these towers, which has encountered some community criticism. The project represents a strategic shift for Vornado, traditionally focused on Midtown office spaces, as it adapts to New York’s housing shortage. The firm, which holds 20 million square feet of commercial property, is also considering divesting from major office assets, potentially accelerating its transition towards residential real estate in New York.
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Sioni Group buying office building for $50M, nearly 60% cut
Amancio Ortega’s buying spree faces a setback as Pontegadea, his family office, sells 366 Madison Avenue in Manhattan for $50 million, a significant loss from the $115.5 million paid nearly two decades ago. The sale price of $588 per square foot reflects current market conditions. Eastdil Secured, with advisors Will Silverman, Gary Phillips, and Jeff Organisciak, is managing the transaction. Despite Ortega’s extensive global property acquisitions, including the recent purchase of the 30-story Sabadell Financial Center in Miami for $275 million and the Veneto Las Olas tower for $165 million, the post-pandemic office market remains challenging.
His firm also acquired the Hotel Banke in Paris for $113 million and an office building in Barcelona for $284 million. Ortega’s net worth, estimated at $115 billion as of July, positions him as the 13th richest globally. Nevertheless, he is not alone in navigating the tough Manhattan office landscape; Savanna recently contracted to purchase a leasehold on 444 Madison Avenue for $50 million, while Westbrook Partners struggles after buying the property for $314 million in 2007 and defaulting on a $120 million loan.
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Jeff Sutton faces foreclosure issues concerning the property at 27-29 W. 34th St. near Herald Square. Helaba, a German lender, alleges Sutton owes over $12 million in property taxes for failing to make payments from 2023 to 2025. Additionally, Sutton reportedly missed a mortgage payment on a $50 million loan from 2018, prompting potential foreclosure actions. He has the option to pay off the remaining mortgage balance of $48.4 million or allow the matter to progress through the court, risking a public auction. The building, owned by 29 West 34 Owner LLC, accommodates an Aldo store and a vacant souvenir shop.
Sutton became the sole owner after buying out SL Green Realty's interest in 2006. While there were plans for a hotel with Sonder, the project is currently stalled. Meanwhile, Sutton encounters difficulties with other properties on W. 34th St., facing foreclosure suits and judgments linked to defaults. Analysts attribute regional declines to reduced sales at Macy’s and changes to Long Island Rail Road routes that affect foot traffic. Conversely, Sutton has seen success in high-end sales along Fifth Avenue.
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Amir Shriki's Aya New York has acquired three commercial condo units at the Cassa Hotel and Residences in Midtown for approximately $54.7 million, including a $34.6 million mortgage from OakNorth Bank. Previously, the property was owned by HNA Group, which faced foreclosure due to defaulting on a $63 million loan. The site spans 123,000 square feet and includes 48 stories and over 50 residential units, although Aya did not purchase any residential part. Future plans for the property remain unclear, but the company's website references a possible hotel project named "Lady D," aimed at transforming the hotel into a lifestyle destination. Aya New York has other properties, including two multifamily buildings purchased for $31 million, significantly below their prior selling price of $85 million in 2013.
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Metropolitan College of New York is set to vacate several floors in its Financial District building, as the space transitions. At 40 Rector St., the China Institute of America sold two ground-level retail spaces for $7.7 million to Albert Rabizadeh’s Global Asset Management. One of these spaces is occupied by Yeh’s Bao, an Asian restaurant, and the other serves as a New York Police Department command center. The China Institute, which has held a significant presence in the building for many years, chose to sell as it no longer wanted to manage the maintenance of these retail areas. The institute acquired the overall property in 2012 for $18.3 million. Current tenants have occupied these retail spaces over several years. The deed was signed by CEO George Geh, with developer Kent Swig also noted in the transaction. The China Institute retains about 40,000 square feet in the building, including an art gallery and classrooms. Meanwhile, Metropolitan College plans to sell its units to the City University of New York for $40 million.
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Owner acquired mixed-use buildings in 2021 for $325M
Northwood Investors is refinancing two Soho properties, 520 and 524 Broadway, four years post-acquisition. Barings is providing $230 million for the refinancing. Northwood purchased the buildings in 2021 for $325 million, backed by a $227 million loan from Ares Commercial Real Estate. Previously owned by the Propp family since 1987, the properties comprise 180,000 square feet of office and 60,000 square feet of retail space, with a 90% leasing rate at acquisition. Notable tenants include cryptocurrency firms Artemis and MoonPay, NoHo Hospitality Group, LaPlaca Cohen, Lululemon, and Balthazar. The main tenant at 524 Broadway is WeWork, which occupies nearly half the building. Meanwhile, Alexis Ohanian's venture capital firm signed a long-term lease for an entire building at 216 Lafayette Street. Additionally, Northwood and Bohannon Companies have proposed a redevelopment plan for a 71-year-old mall in San Mateo, California, aiming to create a retail village with approximately 1,400 homes.
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Wagner Hotel, once owned by Urban Commons, sold to Silver Creek in messy bankruptcy
The former Ritz-Carlton hotel in Battery Park City, now called the Wagner Hotel, is undergoing revitalization following its acquisition by Scottsdale's Silver Creek Development after a prolonged bankruptcy process. The hotel, abandoned since Covid, was previously owned by Urban Commons, led by Taylor Woods and Howard Wu, who accumulated substantial debts and faced multiple legal challenges, including bankruptcy in 2020 for their REIT. They were accused of misappropriating Paycheck Protection Program funds and received severe criticism from a judge for their fraudulent activities.
The hotel entered bankruptcy proceedings in 2022 due to Urban Commons' financial mismanagement and disputes with a condo board concerning shared expenses. Following these complications, Woods and Wu were ousted from control during the bankruptcy process. Silver Creek, the sole bidder, acquired the property via a credit bid exceeding $78 million, with the U.S. bankruptcy judge approving the sale in September 2024. The deal, finalized in late August, proceeded despite objections from a lienholder. Both Woods and Wu did not benefit from the sale, as they are now facing SEC charges for securities fraud, involving over $70 million in investor losses across multiple properties. Woods has denied most allegations, while Wu has not yet responded.
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WeWork has emerged as office matchmaker in uncertain market
WeWork has stepped in to assist Amazon amid its back-to-office mandate, which caused real estate challenges. The coworking company signed a 259,000-square-foot expansion lease at 1440 Broadway, where it already had a substantial presence, on Amazon's behalf. This arrangement exemplifies WeWork’s emerging role as a facilitator of large office deals, allowing clients to avoid lengthy lease negotiations and move into spaces quickly. Amazon has previously faced shortages in available desks and office infrastructure as it required 350,000 corporate employees to report to the office five days a week.
To alleviate these issues, WeWork secured additional spaces, including a 304,000-square-foot lease at 330 West 34th Street and 112,000 square feet at 5 Manhattan West. Though it's unclear how these agreements fit into Amazon’s long-term office strategy, they represent a flexible solution as the company also invests in permanent office spaces. WeWork, having refocused on sustainable growth post-bankruptcy, could help stabilize incomes for landlords of older properties facing occupancy challenges, while potentially disrupting traditional long-term lease models.
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Co-living firm’s bet comes as HNA’s troubled asset changes hands
Aya Acquisitions is acquiring the Cassa Hotel in Midtown Manhattan for $54.7 million, following years of financial difficulties linked to the property, as reported by the Commercial Observer. The purchase involves three commercial condo units at 66-70 West 45th Street, which comprise a 165-key hotel and ground-floor retail, from the distressed HNA Group. A $34.6 million mortgage from OakNorth Bank is included in the deal. This acquisition follows a prolonged foreclosure struggle; HNA lost the 48-story tower due to a $64 million loan default amid its significant 2021 bankruptcy, which required it to divest global real estate assets.
Originally opened in 2010, the hotel features amenities like a fitness center and on-site restaurant, Butter. Founder Amir Shriki's Aya is primarily known for co-living apartments, and this hotel acquisition indicates a strategic expansion beyond smaller multifamily properties. Recent hotel transactions include the sale of the Stewart Hotel for around $275 million, intended for affordable housing conversion.
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German bank Helaba names billionaire as defendant over West 34th Street retail properties
Jeff Sutton faces increasing challenges in Herald Square, as his properties at 27-29 West 34th Street are embroiled in a pre-foreclosure lawsuit initiated by German bank Helaba. As a guarantor for a $50 million loan related to the properties, Sutton is named as a defendant. This marks the second foreclosure case in recent months, following a similar situation at 15 West 34th Street. The area has seen rising vacancies and falling rents. Helaba claims the borrowing entity provided false financial information and neglected to enforce a master lease, invoking “bad boy” clauses that now render Sutton personally liable. Additionally, delinquent taxes exceeded $12 million, with an outstanding loan balance of $48.4 million.
Sutton's joint acquisition of the buildings with SL Green in 2006 is under scrutiny due to deteriorating retail conditions. The footwear brand Geox previously filed for bankruptcy, leaving the space now occupied by a souvenir shop, which, along with Superdry, plans to vacate. Retail interest in Herald Square has waned, with major brands exiting. However, some pockets of activity remain, such as Old Navy opening a new location, indicating a mix of challenges and opportunities in the area’s future.
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Members-only clubs, particularly in the coworking sector for creatives, are experiencing a surge in interest post-pandemic; however, NeueHouse, a notable brand in this space, is shutting down all locations. Members were informed they had until 5 p.m. ET Friday to retrieve their belongings, as the company will file for Chapter 7 bankruptcy and liquidate assets. NeueHouse's board cited burdensome legacy liabilities as the reason for the closure. The organization operated three locations: a significant space in Manhattan, a Venice Beach site, and one within CBS’s original headquarters in Hollywood.
Williams Equities, the owner of the Manhattan building, aims to ensure minimal disruption for current customers during the transition. Despite having hosted major industry events for prominent figures and organizations such as Disney and Paramount, the cause for the unexpected shutdown remains unclear. Meanwhile, the trend for members-only clubs continues, with new establishments emerging, such as Casa Cipriani and Verci, appealing to a younger demographic seeking collaborative environments.
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