Weekly Market Report - August 5, 2025
- Broker Support
- Aug 10
- 9 min read
***
BXP, formerly known as Boston Properties, is moving ahead with the construction of 343 Madison Ave., a $2B, 930K SF office tower that will rise directly above and connect to Grand Central Terminal. The REIT plans to start vertical construction of the 46-story tower after securing a letter of intent with a prestigious financial institution to occupy 30% of the building in its lower and middle sections, or roughly 274K SF. Construction is expected to wrap up in 2029. BXP had to decide by July 31 whether to start construction or terminate the 99-year ground lease it signed with the Metropolitan Transit Authority to redevelop its headquarters.
As part of the deal, BXP constructed a new escalator to Grand Central Terminal that will connect to the lobby of the all-electric 343 Madison. BXP CEO Owen Thomas said that at the best positioned office development site in New York, BXP will deliver a premier workplace that represents a strong and significant value creation opportunity for BXP's shareholders and a core long-term asset within their portfolio. The bulk of the construction costs will need to be spent starting late next year, allowing the REIT time to line up a new financing structure.
***
Developer BXP has begun construction on a 46-story office tower at 343 Madison Ave. after years of preparation. However, the company is now seeking a new investor after its longtime partner, Norges Bank Investment Management, backed out. Norges Bank Investment Management has agreed to sell its 45% stake in the project back to BXP for $43.5 million, which is the amount BXP has invested in the project. BXP has spent 13 years laying the groundwork for 343 Madison and has been its partner since 2017.
Analysts expect a new partner to be found due to the strong demand for space in the building, which will feature direct access into Grand Central Terminal. BXP announced that an unnamed financial institution has signed a letter of intent to lease 30% of 343 Madison's space in the middle floors. Construction is expected to be finished by 2029, and the steepest costs are expected to ramp up until late 2026. BXP's stock fell by 6% to about $66 a share, and the company owns more than 50 million square feet of commercial space nationally.
***
WeWork has launched an international advertising campaign called "WeWork for Business" to attract customers and reshape its image after its 2023 bankruptcy. The campaign, led by Petula Lucey, aims to create a sophisticated and mature approach that reflects a company that has grown up. The new campaign will include TV commercials, posters, social media, and other digital ads. WeWork's founder Adam Neumann once presented the company as a startup that leased office space, renovated it with quirky decor and hip perks, and subleased spaces on a flexible, short-term basis to companies and individuals looking to co-work. The company gained a $47 billion valuation in 2019, but disclosing huge losses in its prospectus for an initial public offering.
The company went public in 2021 and filed for bankruptcy in 2023. A New Jersey court approved a plan to restructure WeWork as a smaller, private business under the control of real-estate software firm Yardi Systems, which installed chief executive John Santora, a veteran executive of real-estate giant Cushman & Wakefield. Lucey hired Lucey to help reshape the iconic brand that was suffering from eroding trust. With competitors like Industrious, LiquidSpace, and IWG’s Regus and Spaces gaining ground, WeWork plans to drive home its years of experience, still-sizable global footprint, and ability to serve businesses of different sizes.
***
Most of the company’s management employees will be required to report to the office three days a week
Verizon is moving its headquarters to a larger office in Manhattan and plans to consolidate over 1,000 employees there next year. The company has leased 200,000 square feet in a recently renovated office tower near Manhattan's Penn Station. Verizon is tightening up its return-to-office policy, requiring management and corporate employees approved for hybrid work to report to the office three days a week, beginning the day after Labor Day. Full-time remote work employees are likely not affected. The new mandates have been good news for the New York City office market, which has been rebounding from one of the worst office downturns since World War II.
Office tenants have leased more than 20 million square feet in Manhattan so far in 2025, the strongest first-half-year period in more than a decade. Manhattan's availability rate fell in the second quarter to 15.4%, its lowest level since January 2021. Verizon's new headquarters will be in Penn 2, a recently renovated building owned by office giant Vornado Realty Trust. Penn 2 is now 60% occupied with the Verizon deal, and Verizon plans to focus on three core campuses: its global headquarters in New York City, its operational headquarters in Basking Ridge, N.J., and another core campus in Irving, Texas.
***
Jack Guttman, a Brooklyn-based developer known for acquiring properties rather than selling them, has sold 1317 36th St. in Brooklyn's Kensington neighborhood to a trust in Borough Park for $13.5 million. Guttman had purchased the property for about $5 million in January 2020, making a healthy profit on the sale. The 1-story commercial property spans 25,000 square feet and dates back to 1931. It is located near Brooklyn's Green-Wood Cemetery. Guttman added several buildings to his real estate portfolio last year, including the Zipper Building at 47-16 Austell Place in Long Island City and a $33.8 million stake in 81 Prospect St. in Dumbo. He also sold a pair of waterfront parcels at 24 Oak St. and 43 West St. in Greenpoint to TF Cornerstone for about $174 million.
***
Developer Aby Rosen is suing a Korea-based investment trust KTB CRE Debt Fund No. 11 for allegedly rigging and a "paint-by-the-numbers charade" in a foreclosure auction for 285 Madison Ave., a 500,000 square-foot office tower near Grand Central Terminal. Rosen claims the auction was a "paint-by-the-numbers charade" and that his adversaries didn't market the building properly. He also claims that lenders forced RFR to pay a $500,000 deposit to participate in the auction. Rosen seeks "untold damages," but the court has seen no reason to delay the auction. The building was acquired in 2012 for $190 million and was upgraded by Rosen over the next two years. In 2017, RFR extracted $127 million in cash and took on $120 million in mezzanine debt. Rosen was unable to repay when 285 Madison's loans came due in 2022. KTB and Rosen were the only parties to attend the auction.
***
The Beitel Group, led by Ben Beitel, has purchased 355 Exterior St. in the trendy South Bronx neighborhood of Mott Haven for $84 million. The real estate firm is planning a massive mixed-use project at the site, which will span 515,000 square feet with 755 apartments and 194 parking spots. The Beitel Group recently landed a $305 million construction loan for the project from Scale Lending, the debt financing branch of developer Slate Property Group. Lightstone, a prominent New York developer, bought the Mott Haven property in 2019 for about $28.3 million.
Construction on the project started in December and is expected to finish in June. It will feature 11,500 square feet of retail space and amenities including an outdoor pool, pickleball court, and golf simulator. The Beitel sale is just the latest example of the long-predicted real estate boom in Mott Haven, with major developers such as Brookfield and RXR opening major projects in the neighborhood. Beitel also has another Mott Haven project in the works: 405 units at 261 Grand Concourse, just a short walk from the Exterior Street site.
***
Developer BXP, commercial broker CBRE, and Otis Elevator have been charged with negligence after an elevator accident outside a church cost a senior citizen her life. Antoinette "Toni" Cohen fell backwards when the elevator's latch failed and the door opened, and she died of her injuries the same day. Her daughter Victoria, who is the daughter of Cohen, accuses the church and its contractors of failing to correct "recurrent" problems with the elevator. She seeks compensation for her mother's funeral expenses and other damages allowed under New York's wrongful-death law.
The state's law is one of the most restrictive in the nation, but family members can seek damages if the deceased suffered sustained conscious pain and suffering prior to passing. The New York Grieving Families Act, which would grant families the right to seek damages for emotional suffering in wrongful death cases, has been vetoed by Gov. Kathy Hochul.
***
Manuel Glas Architects has filed plans with the Department of Buildings to demolish three low-rise commercial structures in Hell's Kitchen, which were purchased by a limited liability company in 2015 for $36.5 million. The site, located near the Hudson River, spans 4,600 square feet and features 95,000 buildable square feet. The property was purchased from Smith Limousine Co. operators Patricia and Maureen Smith. Glas did not respond to a request for comment by press time. In 2023, he filed plans for a 13-story tall project with 32 apartments at 88 White St., which he purchased in late 2021 for $20.5 million. The site is located near the Hudson River and is located close to 11th and 12th avenues. The delay in filing plans for the property's use is unclear.
***
Mix of asset classes scored last month’s top real estate loans
Manhattan's real estate loans saw a 35% increase in CMBS debt in the first half of the year, with two large issuances. Blackstone and Fisher Brothers' 1345 Sixth Avenue secured the largest CMBS loan at $850 million, while Vornado Realty Trust and Stellar Management secured $675 million in debt for their Independence Plaza multifamily complex. Lenders also provided loans across asset classes, including a Times Square office-to-residential conversion, multifamily, and condos.
The top five real estate loans in Manhattan and the outer boroughs include Blackstone booty, Independence Pay, conversion cash, tower power, tower power, soft landing, fixed uppers, budget hotels, stable stash, and retail refi. The United Nations Development Corporation's overhaul of two Manhattan office properties and the Mack Real Estate Group's purchase of a portfolio of rent-stabilized properties in the Bronx were among the top five real estate loans. The loans were issued in the first half of the year, with the largest volume in over 15 years.
***
Firm landed loan from MetLife on 2 Grand Central Tower as it looks to sell for $270M
Rockwood Capital has secured a $262.6 million refinancing for its 44-story Midtown office building at 2 Grand Central Tower. The refinancing comes as Rockwood aims to sell the property, seeking a sale price of $270 million. This is a significant decrease from the previous attempt to sell the property, which was expected to sell for close to $580 million in February 2020. The current sale price is significantly lower than Rockwood's original purchase price of $401 million in 2011.
The office building, which is located near Grand Central Terminal, is currently occupied by tenants like Nuvo Group, Maersk, Cigna, and other financial, legal, and professional services firms. Rockwood Capital has faced challenges in the office market before, including not paying off a $26.7 million loan tied to the Santa Monica Clock Tower in May and selling an office building in Maryland for $29.9 million in 2024, a 78% drop in value from the 2019 purchase price of $133.8 million.
***
Latest purchase of four malls signals continued strength of sector beyond high-end properties
CBL Properties has acquired four middle-market malls from Washington Prime Group for $178.9 million, marking a rare portfolio transaction for the enclosed-mall industry. The deal represents the first major acquisition since 2015 for CBL, aside from buying out its partner's 50% stake in three malls last December. The acquisition includes Ashland Town Center in Ashland, Ky., Mesa Mall in Grand Junction, Colo., Paddock Mall in Ocala, Fla., and Southgate Mall in Missoula, Mont. The malls are all dominant properties in their markets and draw customers from a broad region.
America's mall landscape is still contracting, with 80 malls closing since 2020 and more low-end properties expected to close over the next decade. However, signs that malls' resilience may be extending beyond the small number of trophy properties that many assumed would be the only survivors. CBL reported growing net-operating income for the second time since 2016, and Simon Property Group is reworking its second-tier properties to attract smaller, more suburban customer bases.
***
A class-action fraud lawsuit against LuxUrban Hotels has been allowed to proceed after a federal judge ruled that the Miami-based hotelier likely made false statements about its portfolio. The complaint alleges that LuxUrban falsely claimed to have completed leases at four hotels: the Truss, The James, the Royalton in New York City, and the Trinity in Los Angeles. Former LuxUrban co-CEOs Brian Ferdinand and Shanoop Kothari made apparently false statements promoting the growth of their portfolio, citing lease deals for the hotels that weren't actually completed. Engelmayer wrote that a reasonable investor could have easily understood LuxUrban's statements to convey that it had consummated the transactions and added the hotels to its portfolio. The suit can now proceed to discovery with a pretrial conference scheduled for Sept. 2. 2.
Comments