Weekly Market Report - February 3, 2026
- Broker Support
- 15 minutes ago
- 12 min read
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Saks Global is shutting down most Saks Off 5th locations to refocus on luxury retail as part of its bankruptcy recovery strategy. The company plans to close 57 discount stores, with 12 remaining to sell overstock from Saks Fifth Avenue. Additionally, all Last Call stores, Neiman Marcus' discount outlets, will also close. Geoffroy van Raemdonck, Saks' CEO, indicated this shift aims to enhance luxury sales and full-price selling. Going-out-of-business sales begin soon for 34 locations, while 23 will close immediately.
Saks filed for Chapter 11 bankruptcy in January due to cash flow issues, despite a $500M financing package to sustain operations. Amazon, a major investor, challenged the financial restructuring, seeking separate handling of claims across entities. Saks incurred debt from its 2024 acquisition of Neiman Marcus, which was intended to bolster its luxury market position but instead created financial strain. The company disclosed assets and liabilities between $1B and $10B in its bankruptcy filing.
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Tishman Speyer is reportedly in advanced negotiations to reclaim ownership of the Chrysler Building, with the deal mainly contingent on the rent agreement with Cooper Union, the nonprofit that owns the ground beneath the building. Currently, there is no set agreement on the terms. Tishman Speyer, led by Rob Speyer, has emerged as the leading candidate to purchase the iconic property, Tishman Speyer owned the building, acquiring it in 1997 for $220 million and selling most of its shares over the years. The property's ground rent has significantly increased, going from $7.75 million to $32.5 million annually, which has complicated its ownership status; RFR and Signa defaulted on their payments and lost ownership. The Chrysler Building, developed in 1930, faces high vacancy rates and maintenance issues, yet it holds potential for redevelopment, possibly into apartments. Tishman Speyer may negotiate for a lower ground rent to manage renovation costs, creating potential financial tensions with Cooper Union, which relies on the rent for its funding needs.
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Edward Minskoff's 51 Astor Place has secured $62 million in funding to address vacancy issues following IBM's departure from the NoHo office tower. The capital, raised through preferred equity, aims to assist in leasing the 400,000 square-foot building and make refinancing its $275 million mortgage more feasible as it comes due next year, as noted by Morningstar Credit Analytics. Developed in 2013, 51 Astor stands as a 12-story structure distinct from the surrounding 19th-century buildings, housing tenants like Paul Tudor Jones’ hedge fund. With IBM moving to a new tower, the vacancy rate was expected to hit 37% in 2024, compounded by concerns of its distance from commuter hubs.
The Greenwich/NoHo office submarket struggled post-pandemic, recording negative absorption of 135,000 square feet in 2024, leading to KBRA estimating a value drop of 25% for 51 Astor, to $225 million. However, with increasing demand in the area, including Intuit leasing part of the space, vacancy fell to 17% by September, but the building still lacked sufficient rental income to be profitable. The new funding may provide a lifeline for Minskoff.
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JEMB Realty Corp. has successfully refinanced its construction loan for Brooklyn's tallest office tower, 1 Willoughby Square, retaining control of the 35-story building. Recent investments include those from Safra family members and new equity totaling $68.5 million, intended to pay off $179.5 million of existing debt along with associated costs and reserves. A $125 million mortgage from Deutsche Bank was secured, and a $75 million A-note was integrated into the Benchmark 2026-V20 CMBS conduit loan. The building is currently 53.5% occupied, with a notable tenant being the Albee Square Montessori Public School. The recapitalization involved dividing the property into two condo units, affecting the debt structure.
The property faces challenges, including a 21.1% office vacancy rate in Downtown Brooklyn compared to the city's overall 13.5%. JEMB plans to enhance leasing with new spec suites and has secured tenants like CorePower Yoga for a retail lease and Rubenstein Law for expanded office space. Fitch's report highlights a potential risk due to the complex equity and debt arrangement tied to JEMB’s ownership venture, including $10 million in EB-5 mezzanine debt and six convertible loans amounting to $65 million. The appraisal for Unit 1 stood at $191 million, suggesting a total debt of approximately $190 million.
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Gary Barnett secured a legal win in the battle over the Worldwide Plaza office tower in Midtown, as a New York County Supreme Court judge denied SL Green and RXR's attempt to block Extell Development's foreclosure auction. The auction, originally scheduled for earlier this month, is now set for Thursday. Judge Andrea Masley ruled that SL Green and RXR did not prove the sale would be commercially unreasonable, despite their majority ownership stake. An SL Green spokesperson expressed disappointment but emphasized their continued control over the asset. Barnett's shell company acquired $190M in mezzanine debt linked to the tower and is pursuing foreclosure, while SL Green and RXR described the auction process as a “sham.” With the building suffering from vacancies and a dramatic drop in value, the outcome remains uncertain as negotiations could still occur.
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Last year, Deloitte signed New York City's most expensive lease since the pandemic, committing over $2.6B for a nearly 22-year, 807K SF space at 70 Hudson Yards. This lease reflects companies' willingness to invest in new developments; the tower will be available in late 2028. The lease is more than double the 2024's top lease, $1B from TPG for 300K SF in The Spiral. Starr Cos. also set a 2024 high with a 20-year lease at 343 Madison Ave for nearly $1.3B. Manhattan's office market saw over 32M SF of leases in 2025, a 37% increase from 2024, with overall vacancy rates below 13% and average rents at $77.89 per SF.
Midtown remains competitive, particularly around Grand Central, which recorded 3.5M SF of activity. Notable recent deals include Salesforce's 350K SF lease at 1095 Sixth Ave for $776M and Jane Street's renewal at 250 Vesey St. for nearly $694M, as Lower Manhattan rebounds despite a high availability rate of 18.8%. Existing trophy towers are still in demand, with prices driven by limited supply and high costs for new construction.
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Brookfield’s half of the New York Times Building has seen a nearly 40% drop in value, recently appraised at $635 million, down from $1 billion in 2019, per Fitch Ratings. The property lost its AAA credit rating due to challenges in leasing the 200,000 square feet vacated by law firm Covington & Burling last year. The mortgage, which matured last month, has been extended multiple times since 2020, but no further extensions are possible. The Times Building’s struggles contrast with rising demand and rents in Class A towers around Grand Central Terminal. Midtown’s office vacancy rate stands at 29%, significantly higher than Manhattan’s average.
Located at 620 Eighth Ave., the Times Building was developed in 2007 but newer towers at Hudson Yards have attracted tenants, including Covington & Burling. Brookfield acquired the upper half of the building in 2018 for $11 billion, while the New York Times retains the lower portion. Remaining tenants include Datadog and Seyfarth Shaw, although another tenant, Goodwin Procter, plans to move soon. Fitch highlights that the building generates only two-thirds of the required rental income for debt services and also carries $115 million in mezzanine debt. Expected operational costs are likely to rise, and Fitch's outlook remains negative, indicating potential further value deterioration.
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Hotelier Ian Schrager is teaming up with Highgate to expand his Public Hotels brand after 15 years. The collaboration aims to grow Public through hotel acquisitions and management contracts, although Highgate will not have a stake in the brand. Locations from Highgate's portfolio of 400 hotels will be rebranded as Public hotels. To optimize costs, the dining strategy at Public's sole Manhattan location will shift from in-house dining to using third-party operators for fast-casual and takeout options, with Danny Meyer considering a role in this new lineup. A second Public hotel is set to open in West Hollywood in spring, featuring the revamped dining offerings. Schrager initially launched Public Hotels in 2011 with the aim of expanding rapidly but faced obstacles and sold the Chicago property in 2016. His work with Marriott from 2008 to 2022 put plans on hold. The hospitality sector is currently struggling, with a 1.2% decrease in occupancy rates in 2025 and hopes pinned on upcoming major events to revive travel, despite declining foreign tourism due to previous U.S. immigration policies.
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The development site at 159 Broadway, near the Williamsburg Bridge, has been sold for $30 million to a Brooklyn-based LLC connected to Joyland Management. The site, previously owned by Madison Realty Capital, is located in a trendy area between Driggs and Bedford avenues. Following the purchase, Mendel Berkowitz of Borough Developers submitted plans to construct a 12-story building with 99 residential units, covering approximately 97,000 square feet, suggesting a potential for an additional 9-unit building. The popularity of 99-unit developments has surged since the implementation of the 485-x affordable housing tax break in 2024.
Previously, Cornell Realty Management had planned a grand 26-story tower with a hotel and amenities on the site but faced bankruptcy in December 2020 due to pandemic impacts. Madison Realty Capital acquired the site out of bankruptcy in November 2022 for $32 million. While Joyland and Borough Developers’ exact relationship is not fully disclosed, they are collaborating on projects, including a 96-unit development near Union Square. Joyland also recently sold a 132-unit building in Gowanus for $105 million, while Madison Realty Capital acquired another site in Flatbush from bankruptcy for $70 million after the prior owner was unable to maintain control.
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An Indian-American investor, Paramdeep Singh, has lost two Midtown hotels-turned-shelters due to Covid-related travel issues, owner disputes, and lender lawsuits. The properties include the Hotel at Times Square at 59 W. 46th St. and Hotel 46 Times Square at 129 W. 46th St. Singh's team lost the former to Boris Aronov, who acquired a defaulted mortgage and foreclosed on the property after Singh failed to pay a $57 million debt by December 31. The 234-room building, valued at $53 million, is expected to continue housing vulnerable individuals. Singh also lost the 79-unit hotel at 129 W. 46th St., which he operated as a migrant shelter. The city leased the property, but Singh’s efforts to sell it failed. Both hotels currently remain closed, with Singh facing ongoing legal issues from co-investors.
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Amazon is closing its Amazon-branded grocery stores and automated Go markets, transitioning some locations to Whole Foods. The company acknowledged struggles to create a unique customer experience and a viable economic model for large-scale expansion in its physical grocery ventures. This decision reflects Amazon's ongoing retreat from retail initiatives, following previous attempts to establish a presence in various categories, including bookstores and fashion.
The blog post revealed plans to enhance grocery offerings online and offline, with an emphasis on increasing produce and perishables in same-day delivery warehouses and Whole Foods locations, which now total over 550. Currently, Amazon operates 14 Go stores and 58 Fresh stores, with closures expected to begin soon, except in California where additional notice is required. Amazon aims to assist affected employees in finding new roles within the company. As one of the top three grocers in the U.S., with over $150 billion in sales, Amazon noted a significant growth in perishable items for same-day delivery, indicating ongoing interest in the grocery sector despite operational challenges.
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A landmarked building at 390 Fifth Ave., designed by McKim Mead & White and built in 1906, is facing foreclosure, according to its owner, the Schwalbe family. The building, originally part of the premier shopping district, now suffers from 20% vacancy. The Schwalbes allege that Maverick Real Estate Partners reneged on an agreement to extend their mortgage, leading them to file a lawsuit seeking at least $50 million in damages, labeling Maverick a "notoriously predatory lender." They claim Maverick might pursue foreclosure not just on the property but also on shares of the family business pledged as collateral.
The Schwalbes assert Maverick made false claims regarding payments and insurance, and after negotiations over a loan extension, demanded a higher fee than agreed. Maverick allegedly started collecting rent from the building's tenants, which has hindered the Schwalbes’ ability to meet operating expenses. The family has been involved in New York real estate since 1944 and operates Hilson Management, though details on their operations remain limited. Past legal issues with other Midtown properties further complicate their situation.
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Big-box store signing first Manhattan lease in a decade
JEMB Realty is revitalizing a Midtown shopping corridor, securing a lease with TJ Maxx for 40,000 square feet at Herald Towers in Herald Square—its first new Manhattan lease in a decade. The store will occupy two floors at 50 West 34th Street and is set to open by year-end, marking TJ Maxx's eighth Manhattan location. The 10-year lease carries a blended asking rent of $4 million, with ground-floor retail rents in the area averaging $405 per square foot. JEMB’s Jacob Jerome emphasized the corridor’s importance as a major shopping district. The lease increases occupancy at Herald Towers to 95%, alongside tenants like Old Navy. Although Herald Square has lagged in recovery compared to other Manhattan areas, JEMB's significant investments reflect optimism for the district's future.
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Activist investor Elliott and Morning Calm’s purchase of City Office REIT could be a sign of more REIT acquisitions
Elliott Management, known for investing in financially troubled companies, recently acquired City Office, a REIT valued at $1.1 billion, signaling potential recovery in the office market. City Office, based in Vancouver but lacking Canadian properties, controls 4.2 million square feet of office space in the Sun Belt. Its stock, previously underperforming, experienced a modest premium upon acquisition. This move reflects a broader trend where large investors view discounted office companies as opportunities, despite the overall 20% vacancy rate and evolving tenant preferences for modern amenities. Firms like Rithm Capital are also making significant deals, benefiting from substantial discounts to book value. Investors willing to revitalize properties may see strong returns amid a cautiously optimistic market rebound.
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Bain Capital provides $213M loan to 60 Guilders, Sentry Realty
A year after acquiring 1375 Broadway, affiliates of American Exchange Group finalized a refinancing package for the building. Bain Capital provided 60 Guilders and Sentry Realty with a $213 million loan secured by the Midtown Manhattan office property. This transaction follows the $200 million debt obtained by American Exchange from Aareal Capital when they purchased the property from Savanna in August 2024. Newmark arranged the latest debt for the 27-story, 520,000-square-foot building. In a related move, Sentry and 60 Guilders acquired 1370 Broadway for $75.5 million, backed by a loan from Fortress Investment Group. American Exchange, primarily a fashion manufacturer, is increasingly engaging in real estate ventures. Bain Capital, overseeing around $205 billion, recently raised $1.6 billion for its joint real estate fund alongside 11North Partners. Meanwhile, Sovereign Partners obtained a $150 million refinancing loan for 100 Fifth Avenue.
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CEO Michael Hershman sees corporate headquarters possibilities
Soloviev Group is exploring the development of an office tower on its 57th Street site, with CEO Michael Hershman stating interest in attracting an anchor company. He emphasized the demand for office space, citing the limited availability in the market. The developer envisions over 900,000 square feet of office space on the site, which includes the recently acquired 24 West 57th Street for $67 million, complementing existing properties in the area. In recent months, there has been a surge in interest for prime office locations in New York City, exemplified by Vornado Realty Trust’s 2 million-square-foot project at 350 Park Avenue and RXR and TF Cornerstone’s 2.9 million-square-foot tower at 175 Park Avenue, currently advancing through the city’s Public Design Commission.
Additionally, developer Gary Barnett’s acquisition of 405-415 Park Avenue, along with associated air rights, suggests potential plans for office or mixed-use development, though specifics remain undisclosed. In local news, city public schools will resume in-person classes after remote learning due to a winter storm, and outreach efforts for vulnerable residents are being intensified following recent severe weather incidents. The Alexander brothers' trial is set to start soon, and recent transactions include a $9.8 million condominium sale and a $20.6 million commercial deal in Brooklyn, along with a $12.5 million penthouse listing in Flatiron.
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A new office-to-residential conversion is underway at 80 Broad Street in Manhattan's Financial District, where Broad Street Development and Invesco aim to transform a 37-story office tower into a 326-unit residential building. This project reflects the ongoing transformation of the area despite a recent surge in office leasing activity. Plans involve converting around 360,000 square feet of office space into approximately 323,000 square feet of residential units, complemented by about 12,000 square feet for commercial use. Resident amenities will include a health club, co-working space, and a swimming pool, catering to those desiring full-service living environments.
The building, an Art Deco structure completed in 1935, has undergone renovations to enhance its appeal and is strategically located near major transit hubs. The conversion comes amidst a broader trend where Lower Manhattan has become a focal point for such projects, driven by a mismatch between aging office spaces and modern demands. This ambitious undertaking underscores a shift from traditional office usage to mixed-use residential developments, responding to evolving market needs.
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