Weekly Market Report - September 24, 2026
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New York City postponed a vote on a proposed $100 million property tax incentive for the Hudson Yards skyscraper by developer Tishman Speyer, marking what could be the largest economic subsidy under Mayor Zohran Mamdani. The Industrial Development Agency (IDA) did not address the resolution at its recent meeting, with discussions about possible reconsideration set for November 17. The 99 Hudson Blvd. project, with estimated construction costs of $2.7 billion, aims to begin in January. The 48-story tower is projected to generate substantial local tax revenue, despite the city's $92.2 million tax break, contributing around $860 million in direct and indirect tax revenue and 2,385 construction jobs, along with more than 1,780 permanent office jobs.
Under the proposed arrangement, Tishman would be exempt from real estate taxes, opting instead to pay a lesser "payment in lieu of taxes" (PILOT). Local leader Layla Law-Gisiko emphasized the need for clarity on whether these PILOT payments would assist infrastructure financing for the second phase of Hudson Yards. Historically, the city-backed Hudson Yards Infrastructure Corp has redirected approximately $2 billion in excess revenue to the city, highlighting the interconnectedness of such financial arrangements.
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The Chetrit Organization successfully retained its Midtown office building, 404 Fifth Avenue, through a creative debt acquisition after facing a foreclosure case and $65 million in defaults. The organization, led by Juda and Michael Chetrit, purchased the defaulted debt at a discount, subsequently initiating a foreclosure sale against itself, winning with a credit bid to keep ownership. The Chetrit family had acquired this landmark building in 1998 and had taken loans amounting to $65 million starting in 2016.
A foreclosure case initiated by a Blackstone affiliate in January 2025 accused them of a maturity default. By June 2025, the Chetrit Organization resolved the debt through a discounted payoff. Following this, another foreclosure case was filed in November, ultimately leading to a judgment and determination of debt at nearly $84 million by May 2026. In July, the foreclosure judgment was finalized, completing the sale earlier this month. Unlike its counterpart, the Chetrit Group, the Chetrit Organization has maintained a lower profile, strategically managing its debt without personal guarantees.
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The City Council is advancing a “Storefront Business Bill of Rights” aimed at regulating commercial lease renewals, prompting opposition from real estate and small business advocates due to mandatory lease provisions. Council Member Gale Brewer’s bill would establish tenant protections, including one-time lease extensions and rent increase caps, to reduce retail vacancies. The legislation, last heard in 2021, proposes structured negotiation timelines, with increased notice requirements based on the lease length, allowing tenants to extend leases under certain conditions.
Critics, including the Real Estate Board of New York (REBNY) and the Manhattan Chamber of Commerce, argue that mandatory lease renewals could destabilize the market, making it difficult for landlords and potentially harming small businesses by capping rents excessively. They express concern that the bill may discourage landlords from renting spaces, thereby increasing vacancies rather than addressing them. In contrast, Council Member Virginia Maloney is promoting a “Legacy Business Registry” that encourages the preservation of long-term neighborhood businesses through a fund that offers grants to landlords who sign long-term leases with designated legacy businesses.
Criteria for legacy business designation include a minimum of 20 years in operation and a significant contribution to community identity. Maloney's proposal has garnered support from both REBNY and the Manhattan Chamber of Commerce, praised for its approach of incentivizing landlords instead of imposing regulations.Both bills are scheduled for a hearing on Wednesday, with the influence of the Mamdani administration's position still pending. The discussions reflect a evolving dynamic in New York City's approach to commercial real estate policy amidst the ongoing challenges faced by small businesses.
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Harbor Group International (HGI) secured an extension for a $420 million commercial mortgage-backed securities (CMBS) loan linked to the Black Rock building in Midtown West, despite ambiguity about the property's financial distress. The extension was granted a month before the loan's October maturity, even though a 12-month option existed for ownership. Specific terms of the extension remain undisclosed. The loan for the 38-story, 893,000-square-foot property at 51 West 52nd Street had moved to special servicing prior to this agreement, although it was characterized as a "temporary, technical step" due to an existing extension with Deutsche Bank.
Performance metrics since HGI purchased the office property in 2021 indicate significant underperformance, with occupancy dropping to 83% and cash flow falling 37% below projected levels as of June. Nonetheless, conflicting reports suggest the property was fully leased, bolstered by recent leases from firms including Alston & Bird and Kroll Bond Rating Agency. HGI acquired the building in 2021 for $760 million and invested $128 million in enhancements aimed at attracting premium tenants, featuring upgrades like a modernized lobby and a new amenity center. Initially designed by Eero Saarinen and completed in 1965, the building is a designated landmark. Other tenants include prominent law firms.
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The 800,000-square-foot office building 1 SoHo Square has been sent to special servicing, two years ahead of its $800 million mortgage due date. Acquired by Stellar Management in 2012 for $200 million, the property underwent a $268 million renovation, connecting two prewar buildings with a glass elevator tower. Tenants included Aetna, Flatiron Health, and Warby Parker. However, vacancies have doubled since 2022 to 14%, with cash flow running 23% below projections, as reported by Morningstar Credit Analytics. Notably, Glossier laid off 40% of its workforce in the building. The mortgage was moved to special servicing at Stellar's request, allowing for potential extensions or modifications.
Complicating matters, 1 SoHo Square also carries $120 million in mezzanine debt, which gives mezzanine lenders leverage in the event of a default. Stellar, a major real estate owner in the city with more than 3 million square feet of commercial space, did not respond to requests for comment. Following the passing of founder Larry Gluck in 2024, the property is now owned by his estate. Despite a robust Manhattan office market, 1 SoHo Square's vacancy challenges may persist, exacerbated by Flatiron Health's lease expirations and the availability of space for sublet, raising concerns about the mortgage status. Flatiron Health did not comment.
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Several office-to-residential conversions are advancing in the city despite a structural failure at Pfizer’s former headquarters raising concerns. Developers BLDG and David Werner Real Estate Investments secured a $219 million construction loan from Northwind Group for their conversion project at 100 Wall St., acquired for $116 million in 2024. This plan includes transforming floors two through 11 into 168 apartments while keeping floors 15 to 29 as office space. The Pfizer building incident, where steel columns buckled, highlighted risks in such conversions, particularly with the "scoop-and-stack" technique, which repositions building volume to the roof but adds complexity and risk.
Nevertheless, the Financial District site is considered suitable for adaptation due to its large floor plates and existing elevator banks for different tenants. Triton Construction and Gensler Architecture are involved in the project. Additionally, Northwind Group is financing another conversion at 141 Willoughby St. in Downtown Brooklyn, which shares similar favorable characteristics for residential conversion.
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Extell Development has secured a $1.25 billion construction financing package for its Times Square supertall project, “The Torch,” with a $1.1 billion construction loan from banks led by JPMorgan and a $150 million mezzanine loan from U.S. financial institutions. The project at 740 Eighth Avenue has completed 40 of its 60 stories, featuring a 250-foot amusement ride. The firm indicated it signed a memorandum of intent for roughly $1.3 billion in financing in March 2025. The senior loan has a rate of SOFR + 4.0% and the mezzanine financing at 6.79%. The hotel will now have 1,800 rooms, increasing from the initially reported 825, making it one of New York City's largest hotels.
Extell has entered a 40-year franchise agreement with an unnamed international hotel chain, which will contribute $60 million in financing. Additionally, a 15-year agreement has been established with a restaurant group for the building's dining venues. Expected annual stabilized net operating income from the project ranges between $250 million and $270 million, with no additional equity needed to complete construction. The Torch will also feature extensive advertising and food space, multiple observation decks, and a drop tower ride.
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Northwind Group has provided a $219 million construction loan for the conversion of 100 Wall Street, a 463,000-square-foot office building in the Financial District. The joint venture involving Lloyd Goldman’s BLDG Management and David Werner Real Estate Investments plans to convert floors 2 to 11 into 168 rental apartments, while maintaining office space on floors 15 to 29, which are over 95% leased. The residential section will feature amenities like a pool and fitness center, with Gensler as the architect. This loan follows a $95 million predevelopment loan previously provided by Northwind and marks the firm's eighth financing for such conversions in the city.
Both projects, including a similar one at 141 Willoughby Street in Downtown Brooklyn, utilize the 467m tax incentive program, ensuring affordable housing units. Eliasaf highlighted the need for more housing in the city, emphasizing the importance of balancing affordable and market-rate units. The conversions face scrutiny after a recent collapse at the former Pfizer headquarters led to increased inspections of similar projects. David Werner and BLDG purchased the tower from Barings in 2024 for about $116 million, quickly initiating planning and tenant relocation.
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Malls are experiencing a significant resurgence after struggling for years, outperforming all commercial property types as investors recognize their lasting appeal. According to Green Street, mall values rose 13% over the past year, a performance surpassing other property sectors and more than doubling the overall commercial real estate price increase. Dwindling returns in multifamily and office spaces are driving investment towards retail, with stable occupancy and rent growth bolstered by minimal new supply, resilient consumer spending, and fewer retailer bankruptcies. Prominent mall owners, like Simon Property Group, are seeing stock performance exceed previous highs, marking a turnaround since the pandemic-induced decline.T
he revival has coaxed companies like Unibail-Rodamco-Westfield back into the U.S. market with significant investments in mall properties, indicating a growth trajectory for tenant sales and income. Middle-market malls are also witnessing increased occupancy. After a challenging pandemic era marked by closures, CBL Properties noted foot traffic and sales improvements, reflecting a broader uptick in mall vitality.Younger consumers are increasingly frequenting malls, and despite improvements, concerns about sustainability remain, with some investors cautious about the retail experience's future. However, recent success stories like CBL's West County Center reveal a drastic improvement in performance, preparing for refinancing after a decade of decline. Overall, the mall landscape is transforming, showing promising signs of growth and resilience.
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The $800 million mortgage for Stellar Management’s prime office property has been transferred to special servicing at the landlord's request, allowing for potential extensions or modifications. Stellar purchased the property in 2012 for $200 million and invested $268 million in renovations, including a new 19-story glass elevator tower. However, the property has seen its vacancy rate double over the last four years, reaching 14% by year-end, with cash flow falling short of expectations. Flatiron Health, a major tenant occupying 28% of the space, is reportedly preparing to exit, as evidenced by its sublet offerings.
Other tenants include Warby Parker, MAC Cosmetics, Aetna, and Trader Joe’s. Additionally, there is $120 million in mezzanine debt tied to the asset, with creditors having default options. The mortgage has two years remaining. Recently, Stellar promoted Matthew Lembo and Ryan Jackson to co-CEOs, succeeding Larry Gluck, who co-founded the firm in 1985 and passed away in June 2024 after battling ALS. Stellar's portfolio mainly comprises over 13,000 apartments and 3 million square feet of office and retail in New York City.
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Donald Trump, during his tenure as head of the Trump Organization, licensed his name for the Trump Soho hotel-condo project led by developer Tamir Sapir two decades ago. Following Sapir's death in 2014, the Trump Organization, now managed by Trump's sons Eric and Donald Jr., partnered with Sapir's son Alex to develop a Trump Tower in Tbilisi, Georgia, Sapir's birthplace. The project involves a 62-story condo tower, part of a $2 billion master plan, positioned to be the tallest in Georgia, with marketing support from local developers Archi Group and INVIA.
Eric Trump emphasized the project's architectural significance and the importance of local partnerships for its success. Despite not being equity partners, the Trump Organization oversees project design and management. The development is financially backed by land acquired from a foundation linked to billionaire Bidzina Ivanishvili, sanctioned by the U.S. in 2024. The development aims to attract international buyers, with significant interest expected from the Middle East, Europe, and the U.S. Sapir hopes this project will enhance Georgia's appeal to foreign investors.
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Over 2,000 buildings in New York City are estimated to qualify for the Community Opportunity to Purchase Act (COPA), a measure that city landlords oppose. COPA allows city-approved nonprofits the first opportunity to buy distressed multifamily properties. HPD Commissioner Dina Levy stated that the estimate is fluid as eligibility can change daily. COPA has been subject to multiple revisions; an earlier version was vetoed by then-Mayor Eric Adams, leading to a reintroduction with reduced eligibility and shorter bidding windows for nonprofits. Councilwoman Sandy Nurse emphasized the bill targets a narrow range of buildings to address the housing crisis. The Real Estate Board of New York acknowledged improvements in the current version but suggested further restrictions on eligibility expansion.
Some landlord groups still oppose COPA. The administration supports the bill as part of a strategy to change ownership of troubled buildings.The Block by Block initiative aims to enhance enforcement against problematic landlords and facilitate the transfer of these properties to responsible owners. Concerns were raised about HPD's resources to execute these initiatives effectively and the necessary capital funding for affordable housing projects. Levy confirmed HPD's staffing increases and pledged aggressive investigation of housing complaints. Additionally, the hearing discussed various housing measures and legislation, including a bill for electronic registration of rent-stabilized properties
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Flagstar Bank has filed a lawsuit against Leagam Partners, a firm connected to real estate investor Michael Aryeh, for defaulting on a $49 million loan for four prewar walkup buildings in Upper Manhattan, encompassing 214 apartments, some rent-stabilized. The properties include three in Inwood and one in Kew Gardens, Queens. Flagstar seeks judicial approval to sell the buildings to cover the remaining loan balance of $47.4 million, plus interest and fees, alleging default for over two years. Alex Hajibay, who signed the mortgage in 2020 and is linked to Heritage Affordable Communities, is also a defendant.
The relationship between Hajibay's Heritage and Aryeh's Heritage Realty is unclear, although both share office space. This legal action emerges as Aryeh faces complications from a prior case involving five stabilized buildings in Washington Heights, where improper deregulation required restoring 46 apartments to stabilizations. Leagam Partners purchased the four properties in 2017 for $57 million, with two containing rent-stabilized units, their values decreasing since 2019's pro-renter regulations.
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Shaya Boymelgreen, a developer known for converting outdated office buildings into condos, faces allegations of failing to pay over $100,000 in rent for a retail space at 250 W. 85th St. This lawsuit, filed by Benchmark Realty Group, follows another suit from April where Boymelgreen was accused of defaulting on $103,000 in rent for a storefront at 1668 Broadway. That previous lawsuit was discontinued without costs. Boymelgreen’s development legacy includes transforming a former JPMorgan tower into 326 luxury condos, and other properties like Newswalk, where residents complained about construction issues, leading to a two-year ban from selling condos by the New York attorney general in 2016. His latest venture involved a CBD boutique named Alter Native, co-owned with his wife, which closed in August. Benchmark asserts that the Boymelgreens guaranteed the store’s lease but have made no rent payments since April. The state does not list Alter Native among licensed dispensaries, suggesting it may not have been operational. Attempts to reach Boymelgreen for comments were unsuccessful.
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Global entertainment company Bally’s has secured $560 million in financing to progress its casino complex in the Bronx. The financing, comprising a $400 million loan and a $160 million loan from WhiteHawk Capital Partners, represents a significant advancement in Bally’s $4 billion project, Bally’s Bronx. This development plan includes a 500,000-square-foot casino, a 500-room hotel, and a 2,000-seat arena. The financing is anticipated to close in the third quarter of 2026, facilitating pre-construction and other associated costs. Bally’s chairman Soo Kim emphasized that this funding enables progress in pre-construction planning and enhances flexibility for capital opportunities.
Citizens Capital Markets acted as financial advisor, while Fried, Frank, Harris, Shriver & Jacobson provided legal counsel. The casino complex will be located on the former Trump Links golf course at Ferry Point Park, a site of nearly 20 acres, acquired by Bally’s from the city for $156.6 million earlier this year. Bally’s received one of three state licenses for casinos in the five boroughs, while the other two licenses were awarded to establishments in Queens, including Steve Cohen’s and Hard Rock Entertainment’s projects.
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The Rockefeller Group and Atlas Capital Group are set to develop a 340-unit residential building at 200 West 97th Street on the Upper West Side, as reported by the Commercial Observer. The project, encompassing 392,000 square feet over 28 stories, will replace a church previously acquired by the developers earlier in the year. Plans include retail space, a parish school, a residential lobby, and amenities like a terrace, pool, pet spa, podcast room, screening room, lounge, sports simulator, kids' room, coworking spaces, a café, and a fitness center.
Notably, at least 25 percent of the residential units will be designated as affordable due to the utilization of the 485x tax break. Frank Fusaro of Handel Architects is the project architect. Hilary Allard Goldfarb from Rockefeller emphasized the goal of creating a premier multifamily community with essential affordable housing, while preserving the church and rectory. The Roman Catholic Church of Holy Name of Jesus and Saint Gregory the Great was sold for $96 million as part of the Archdiocese of New York's strategy to divest real estate to fund settlements for clergy abuse victims. The Archdiocese has previously sold other properties, including a ground lease for the Lotte New York Palace.
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