Weekly Market Report - February 17, 2026
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The office tower at 450 Lexington Ave. boasts a prime location next to Grand Central Terminal and is fully occupied, yet the cost to maintain its competitiveness is soaring. RXR procured the building in 2012 for $720 million and is set to invest approximately $500 million in upgrades, largely for tenant Davis Polk & Wardwell. The upgrades will feature high-quality interiors and an exclusive cafe for the law firm.
Financing renovations primarily through debt, RXR replaced a $272 million mortgage with a $407 million one maturing in two years. RXR's CEO highlights the ongoing demand for top-tier office assets; however, a RXR spokesperson disputes KBRA's original financial assessments, noting an overstatement of RXR's direct investment. KBRA later adjusted its renovation cost estimate to $476 million. Developer Steven Roth also faces rising renovation costs, impacting profitability in the industry, contributing to significant declines in real estate stocks due to concerns over AI's effects on commercial real estate and office jobs.
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The Waldorf Astoria, a renowned luxury hotel in Manhattan, may soon be up for sale after reopening less than a year ago. Its Chinese owners, Dajia Insurance Group, are preparing to market the hotel following an eight-year, $2 billion renovation and partial condominium conversion. Eastdil Secured will handle the listing, expected next month. Anbang Insurance Group, which purchased the hotel for $1.95 billion in 2014, initially planned a $1 billion renovation but ended up exceeding the budget significantly.
The renovations reduced the hotel room count from 1,400 to 375, added 372 luxury residences, and created extensive amenity spaces. Despite the challenges faced, the renovation is viewed as a success, and the hotel hosted a gala for the Real Estate Board of New York recently. However, Dajia does not anticipate recovering its full investment from the sale, which is expected to be listed at over $1 billion, appealing primarily to Asian and Middle Eastern sovereign wealth funds. Hilton, which has a 100-year management agreement with the property, expressed its commitment to continuing its luxury hospitality service. The luxury hotel sales market in NYC has seen a resurgence, with over $1.1 billion in trades reported recently.
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The developers of the American Dream megamall are accused of collaborating with New Jersey officials to diminish the mall's valuation and reduce payments to bondholders. East Rutherford previously lowered the assessed value from $3.3B in 2019 to $2.5B in 2022, with a tax court judge further reducing it to $1.65B, as stated in a lawsuit by bondholders' trustee, U.S. Bank Trust Co. This reassessment decreases American Dream's payments to bondholders to below half of the owed annual interest, jeopardizing $800M in municipal debt tied to payments in lieu of taxes (PILOT).
Nuveen owns almost 90% of the PILOT bonds amidst American Dream's financing exceeding $2.8B, including a $1.1B tax-exempt bond package. East Rutherford's share of PILOT payments takes precedence, meaning bondholders bear any losses directly. The lawsuit alleges manipulation of the mall’s valuation due to a less competent appraiser underestimating its worth. A spokesperson for American Dream rejected the bondholders’ claims, labeling the lawsuit as an effort to undermine the judicial process. Despite reported increased occupancy, sales figures remain below expectations post-COVID. Bondholders seek to prevent American Dream from exerting influence over the borough's assessment for future tax years.
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The retail space market in New York has seen growth in prime areas, but wider impacts from tariffs are causing concerns. While asking rents are increasing along busy corridors like Fifth Avenue and SoHo, they are declining elsewhere, particularly affecting local businesses. The Manhattan Chamber of Commerce reports that tariffs have imposed an additional $4.5 billion burden on small businesses, with significant cost increases for goods and construction material. Small businesses face heightened struggles with a weakening economy and consumer sentiment. Although some sectors like luxury goods remain strong, rental negotiations show businesses seeking lower rates due to shrinking margins. Vacancies are concentrated in specific neighborhoods, making it difficult for essential services and small operators to thrive amid rising costs and competition.
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Sweet treat spots on the Upper West Side face foreclosure risks as Blackstone claims landlord Heller Realty defaulted on a $17.3 million mortgage for two retail complexes. A lawsuit seeks to auction the properties to recover the debt. One complex features notable businesses like Delice Macarons at 321 Amsterdam Ave, while the other includes Omonia Café at 2801 Broadway, amidst several vacancies. Filed by Rialto Capital Advisors for Blackstone, the suit accuses Heller of failing to pay back a 2018 loan fully due in July. Heller was expected to transfer retail rents to Rialto but has not complied. The total debt amount is pending, but the lawsuit indicates a 24% interest rate applies. Heller Realty, previously controlled by Joseph Heller until his death in 1986, has held the properties for decades. Recent retail rents reached $200 per square foot on Amsterdam and $150 on Broadway. In September, Heller Realty sold a mixed-use property for $66 million.
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An office building in Manhattan's rezoned Garment District has changed ownership for the second time in over a year and is set to be converted into apartments. Brooklyn's Joyland Management acquired the property at 254 W. 35th St. from Cayre Equities for approximately $26.2 million, having purchased it for $16.2 million in November 2024, yielding a $10 million profit. Originally, Cayre planned to turn it into storage. Joyland intends to convert the 16-story building into a residential project featuring 166 units, including low-income housing, with plans filed in January.
The sale closed on February 2. The City Council rezoned Midtown South to allow for increased housing, influencing the new plans, with about 9,500 residential units designated for the area. Joyland has been active in real estate, including buying 159 Broadway for a 99-unit project and selling an apartment building at 130 Second St. for $105 million, alongside acquiring properties near Union Square for additional developments.
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In the second half of 2025, Manhattan's retail leasing activity surged, driven by significant 50,000-square-foot deals, with four such leases recorded, predominantly on the west side. This increase stems partly from repurposed warehouses providing large retail spaces. Convene Hospitality Group and Equinox secured approximately 50,000 square feet at the renovated Terminal Warehouse in Chelsea, while Chelsea Piers leased a similar area at 200 Varick St. Additionally, a 47,000-square-foot lease at 135 E. 57th St. was signed by the fitness club. Noteworthy transactions included French brand Kujten taking 4,400 square feet at 831 Madison Ave., and PacSun opening its first U.S. store in nearly two decades in the Flatiron District, which is drawing attention from brands like Nespresso and Aritizia. Keith Decoster highlighted a more measured retail growth compared to the peak in 2016.
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Mindspace will expand its presence by 11,500 square feet in a Class-A office building at 25 Kent Ave., Williamsburg, this summer, increasing its total occupancy to approximately 50,000 square feet on the fourth floor. The 10-year lease at an asking rent of $72 per square foot was brokered in-house by Global Holdings representatives Craig Panzirer and Alex Radmin, with Mindspace foregoing a broker. Mark Goldfinger, head of North America at Mindspace, attributed the expansion to strong demand from the Williamsburg community, highlighting high occupancy rates and collaboration with Global Holdings to improve member experiences.
Mindspace currently operates 45 locations globally, with this being its sole New York City site. Craig Panzirer noted that the expansion emphasizes their investment in tenant experience and high-performance work environments. This follows significant leases in the area, including Rilla securing nearly 60,000 square feet and Five Iron Golf's 16,000-square-foot lease for a Brooklyn flagship.
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A retail building in the Meatpacking District has sold for $23.5 million, featuring 22,300 square feet across three stories. Located at 446 W. 14th St., this property houses Puttery, an upscale mini golf venue with a commercial kitchen, themed courses, and bars. Puttery, part of Drive Shack, has eight years left on its lease and is the only location in New York, despite having other venues in major cities. Previous owner Thor Equities sold the property after legal issues with lender Maverick Real Estate Partners, who acquired it for $5 million at auction. The new owners, Klosed Properties and Namdar Realty Group. The property's distinctiveness in a challenging retail market, highlighting its long-term value and demand. The Meatpacking District's 14th Street corridor showed a decrease in availability and a slight drop in average asking rent to $268 per square foot.
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Carnegie Hospitality plans to open a new Carnegie Diner & Cafe and a rooftop bar at the Voco Hotel in Times Square. CEO Stathis Antonakopoulos expressed the company's goal to expand its portfolio in the hotel sector following the success of their Martinique hotel location opened in October. The diner, set to open on February 23, occupies a 3,200-square-foot space on the second floor of the IHG-owned hotel at 170 W. 48th St., while the rooftop bar, with a 2,700-square-foot area on the 33rd floor, is slated for a mid-March opening. The Voco Roofbar will feature a retractable roof and a tapas-style Asian fusion menu, along with a high-end mixologist. Both leases are for 20 years, with rents undisclosed. This marks the seventh Carnegie Diner & Cafe location, with four in New York. Antonakopoulos emphasized the importance of accessible dining options within hotels, challenging the perception of hotel restaurants being prohibitively expensive.
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Renwick Hospitality Group will launch Golden Child, a rooftop bar at Hotel Park Ave, on April 7. The 3,000-square-foot space on the 15th floor includes an outdoor terrace and indoor seating, designed to evoke a social club atmosphere with an Ivy League-inspired menu. Cocktail categories feature names like core curriculum and electives, with prices ranging from $18 to $22. This marks the group's 10th food and beverage initiative in New York hotels. Managing Partner Gary Wallach emphasized the focus on creating an energetic, welcoming environment. The hotel, managed by Lore Group, also hosts Seed Library cocktail bar and Park Rose restaurant. Global Holdings Management purchased the site for $125.7 million in July 2023, prior to its opening as Hotel Park Ave.
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Sioni Group plans to demolish a two-story commercial building at 28 W. 37th St. in Midtown South, with demolition costs estimated at $300,000. The current structure is a 10,300-square-foot vacant building. Sioni Group, led by Ray and Jack Yadidi, has been active in the area, having acquired 366 Madison Ave. for $50 million and sold a hotel at 371 Seventh Ave. for $255 million in 2025. They also secured a $215 million construction loan for a luxury project at 100 W. 37th St., three blocks from the Empire State Building.
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Chobani has signed a lease for about 21,100 square feet at a new 17-story building located at 99 Hudson St. in Tribeca. The brand will occupy the entire 14th floor and part of the 15th floor, with the lease running until September 2027. Nearby is Chobani's headquarters at 360 Bowery, a 120,000-square-foot building. The asking rent was $70 per square foot for the 14th floor and $64 per square foot for part of the 15th. Chobani joins four other tenants at 99 Hudson St., totaling about 46,500 square feet leased, raising the building's occupancy to 98%. Olshan Properties’ CEO noted the ongoing leasing momentum in Tribeca.
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