Weekly Market Report - January 27, 2026
- Broker Support
- 5 days ago
- 10 min read
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Rithm Capital, von Finck family double down on trophy offices with $275M refi
The owners of 745 Fifth Avenue have decided to abandon their residential conversion plans, refocusing instead on the office market, reflecting the recovery of Manhattan’s premier office sector. Rithm Capital and the von Finck family halted their plan to transform the Plaza District tower into apartments and are pursuing a $275 million refinancing with nearly $40 million in new equity to cover leasing, capital improvements, and other costs. The 470,000-square-foot prewar building was 37 percent vacant as of October, with about 200,000 square feet available for leasing. The retail section is leased to Bergdorf Goodman’s men’s store.
Control of the property recently shifted to Rithm after acquiring Paramount Group, which originally purchased the building for $263 million in 2002. Though Rithm did not specify reasons for halting the conversion, high renovation costs, estimated at $663 per square foot for similar projects, played a role. Instead, they aim to leverage the building’s prime location and views to attract tenants willing to pay top dollar for quality office space. Rithm expressed confidence in the strong demand for such properties amid an overall rise in Manhattan leasing activity, which reached 42 million square feet in 2025, the highest since before the pandemic.
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Artificial intelligence startup Anthropic plans to significantly expand its office space in Manhattan, seeking between 250K SF and 450K SF, as reported by Bloomberg. Currently, the company occupies 10K SF to 20K SF at 155 Avenue of the Americas, with its lease expiring this year. Anthropic, which developed the chatbot Claude, did not comment on the reports. In September, the company raised $13B, valuing it at $183B, and announced plans to invest $50B in AI infrastructure in the U.S., starting in Texas and New York.
Additionally, Anthropic is reportedly looking to expand its presence in San Francisco, discussing leasing the entire 300 Howard St. property, previously known as 199 Fremont St. AI companies were responsible for significant office activity in New York City, leasing 486K SF in Manhattan during the first nine months of 2025, an increase from previous years. A deal with Anthropic could represent a major portion of AI leasing activity, although it would still be small relative to Manhattan's overall office market, which experienced its strongest year in over a decade.
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In 2025, Brooklyn's commercial real estate market recorded $6.6 billion in deals, a 16% decline from 2024, influenced by a lack of major transactions. Overall, 1,191 deals occurred, a 3% drop aligning with the 10-year average of approximately 1,200 deals annually. Notable deals in 2024 overshadowed the largest 2025 transaction, which was the $210.5 million acquisition of a multifamily building by Fetner Properties and others. Development sites and special-use properties saw dollar volume increases of 24% and 10%, respectively. Mixed-use properties accounted for the highest volume, totaling about $1.8 billion across 445 deals, although both figures decreased from 2024. Greater Downtown Brooklyn led in dollar volume with roughly $2.2 billion in deals, while North-Central Brooklyn had the most transactions at 259. Historical data indicated 2022 was the peak for dollar volume at $9.5 billion. TerraCRG's CEO anticipates increased activity in 2026, driven by housing demands and stable interest rates, despite uncertainty surrounding future market conditions.
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Charles Cohen is facing significant challenges as he approaches the potential loss of another major property, the Cohen Brothers Realty headquarters at 750 Lexington Ave, which is set for foreclosure auction due to a $155 million debt. The auction, scheduled for Wednesday at 2:15 p.m. at the New York County Courthouse, follows Cohen's recent struggles, including the sale of a building on East 54th Street at a diminished price. The 31-story, 350,000-square-foot tower, known as International Plaza, has suffered from high vacancy rates and decreased value, plummeting from $300 million pre-pandemic to $41 million recently. Despite efforts to lease out the property, including a deal with WeWork that granted below-market rent and free rent periods, vacancies remained high at 27% in June. Cohen's real estate portfolio, amounting to 12 million square feet, is shrinking as he attempts to raise funds to repay $187 million in personally guaranteed loans. The outcome of Wednesday’s auction remains uncertain, as interest from potential bidders has emerged.
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Société Générale is considering relocating its New York headquarters from 245 Park Ave., seeking approximately 500,000 square feet in Manhattan. Potential sites include Vornado Realty Trust's 15 Penn Plaza, RXR Realty and TF Cornerstone's 175 Park Ave, and BXP and Moinian Group's 3 Hudson Blvd. Their current lease expires in 2032, but staying at 245 Park is also a possibility. This move reflects a trend among financial firms targeting quality office spaces in Midtown, particularly along Park Avenue, where firms like Citadel and Blue Owl Capital have expanded. JPMorgan Chase has recently opened a megatower in the area, investing $1 billion in renovations for the old Bear Stearns offices. With top buildings nearing full capacity, new construction options are emerging, exemplified by Related Cos. and Oxford Properties securing financing for a new skyscraper at 70 Hudson Yards for Deloitte's headqua
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Vornado Realty Trust is nearing the refinancing of a $525 million mortgage for 1 Park Ave., a historical building from 1925 that embodies a class struggle in New York real estate. While it boasts modern amenities and a long-term lease with NYU Langone Health, it faced challenges due to its Class B status, which typically rents for less than Class A buildings. S&P Global downgraded its rating on the mortgage two years ago, indicating concerns over its competitive edge. Despite significant investments of $140 million over 15 years to upgrade the property, some remain skeptical about its classification. Recently, KBRA reclassified 1 Park as Class A, noting its charm and upgraded features like a Beaux Arts lobby. The new mortgage, backed by Wells Fargo and Goldman Sachs, has a short term and reflects a broader caution in the office market post-pandemic, with the appraised value dropping from $875 million to $840 million.
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Paramount leases 70K sf at Manhattan purpose-built facility
Paramount Television Studios has signed a lease for 70,000 square feet at Vornado Realty Trust’s Sunset Pier 94 Studios in Manhattan, as part of its strategic focus on studio space amid its acquisition pursuits involving Warner Brothers. This newly leased space represents about a third of the studio facility, which totals 232,000 square feet and includes six sound stages, presentation spaces, and offices. Paramount plans to utilize this space for filming the second season of “Dexter: Resurrection” for Paramount+. The specifics of the lease term and rent remain undisclosed, although the average asking rent for industrial space in Manhattan was reported at $32.17 per square foot. In August 2023, Blackstone and Hudson Pacific joined Vornado in this venture, contributing a collective $350 million alongside the city’s Economic Development Corporation. Development incentives included $73.5 million for maintenance of the pier until 2060 and a starting rent of $900,000 per year, (which only increases after 99 years). New York continues to be a significant hub for studio space despite its challenges with high costs and limited availability.
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JSRE Acquisitions is executing a significant property selloff in SoHo. The company sold the office and retail building at 138 Spring St. for $43.7 million to a Midtown South-based LLC, closing the deal on January 15. This transaction occurred just two days after JSRE sold two nearby apartment buildings at 159 and 161 Prince St. to Michael Ostad for $18 million. Notably, JSRE bought the Spring Street location in 2013 for $48.5 million, confirming a financial loss on the January sale. The Prince Street properties previously sold for $30 million in 2014, indicating another loss for JSRE.
The 6-story Spring Street building, dating back to 1920 and renovation in 1982, spans approximately 16,000 square feet. Current tenants include luxury brands Mackage and P. Johnson, with office rents estimated at $65 to $79 per square foot. The buyer, Evergreen Peak LLC, is based at 136 Madison Ave., and the deal appears to be an all-cash transaction. The buyer's future plans for the property remain unknown. Nearby, another transaction involved a Japanese investor acquiring 120 Spring St. for $18.5 million, with retail rents on Spring Street averaging $734 per square foot, a 2.2% rise from the previous quarter.
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The Frame, an unfinished 8-story office development at 541 W. 21st St. in West Chelsea, has new ownership after a lengthy court battle. Real estate firms G4 Capital Partners and SME Capital Ventures acquired the site for $46.2 million via bankruptcy auction. The sale was approved by a federal judge on Oct. 28 and concluded on Dec. 29. G4 Capital, the primary lender since 2019, had previously provided a $56 million mortgage for converting the prewar warehouse into tech-focused open-floor-space. SME Capital added $5 million as a mezzanine loan. The project stalled financially during the pandemic, triggering a foreclosure attempt by SME Capital to recover its investment.
The original owner, Erno Bodek, filed for bankruptcy protection to halt the sale, leading to a protracted legal dispute with the construction and development managers, Higher Ground and Cauldwell Wingate, who argued their financial interests were at risk. Judge Lisa Beckerman permitted an auction but allowed the managers to file liens of $1.2 million and $2.2 million against the property. G4’s purchase was facilitated through a credit bid, allowing them to use what they were owed as bid payment. The transaction is structured through a shell company, 541 W 21 Capital, linked to SME Capital, which received a $25 million loan from G4 to support finishing the planned 65,000-square-foot building. As of early 2023, the site was reportedly 99% complete before the impending foreclosure auction. Attempts to reach all involved parties went unanswered.
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Hubb NYC Properties has sold the Chelsea location of kitchenware retailer Williams-Sonoma for $5.8 million, significantly down from the $30 million it paid for the Seventh Avenue storefront in 2012, marking an over 80% loss. The 5,000-square-foot retail space at 110 Seventh Ave., acquired by Michael Weitzman, CEO of Double U Development, was financed with a $3.7 million mortgage. This sale may represent Weitzman's first retail investment in Manhattan, as his company's previous acquisitions have focused on Brooklyn. The steep decline in property value is attributed to a deteriorating shopping environment in the area.
Once home to the Barneys department store, which closed in 1997 and briefly reopened before shuttering again, the neighborhood has seen other retailers like EQ3 and a Williams-Sonoma offshoot also close in recent years. The remaining Williams-Sonoma store at this location has operated since at least the early 1990s and is one of two in Manhattan. The building, constructed in 1910, has a varied history of tenants, including a printing company and a performance space. In 2000, developer Cary Tamarkin converted upper floors into residential units known as City Prairie. Efforts to reach Weitzman, Hubb CEO John McCarthy, and representatives from Williams-Sonoma and ConnectOne Bank for comment were unsuccessful.
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A Japanese investor recently purchased 120 Spring St. in SoHo, Manhattan, for $18.5 million in cash, marking a resurgence in Japan's interest in New York real estate. The two-story retail building is fully leased to Birkenstock, and the acquisition was made from a limited liability company associated with Icon Realty Management. Although it is unclear when Icon acquired the property, records suggest they have owned it since at least 2016. The building spans approximately 2,300 square feet, with a lease that includes annual rent increases and expires in December 2027. This sale reflects the growing demand from international investors, particularly from the Pacific Rim, for prime NYC retail spaces. Japanese firms have recently been active in Manhattan, including Hanshin Juken and Norbil Trust, both of which purchased multifamily buildings nearby. Ground-floor retail spaces along Spring Street maintained an average asking rent of $734 per square foot during the last quarter of 2025.
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Spending on data-center construction is expected to rise by 23% in 2026
Commercial real estate construction is expected to experience minimal growth this year, largely hindered by high interest rates, rising material costs, and a tight labor market. According to FMI Corp., spending on traditional construction projects like offices, hotels, and warehouses is projected to decline in 2026. However, data centers, driven by demand from major tech firms for AI capabilities, are a notable exception. Construction expenditure on data centers is forecasted to rise by 23% in 2026, increasing their share of nonresidential building construction from 2% in 2023 to over 6%.
These large-scale projects, often exceeding $1 billion, require extensive electrical infrastructure and employ thousands, contrasting with typical commercial projects that involve smaller budgets and workforces. A tight labor pool may pose challenges to meeting the construction deadlines of data centers. Moreover, a significant number of construction firms report adverse effects from stricter immigration policies, which have led to labor shortages. Tariffs on materials have also pressured project costs, prompting many firms to increase bid prices. Overall, nonresidential construction is expected to total $844.4 billion this year, representing a slight increase but a real decline when adjusted for inflation.
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Dekabank alleges Exchange Building sprang major leaks because of Blackstone’s inaction
Dekabank has filed a lawsuit against Blackstone Property Partners concerning the 23-story Exchange Building in Downtown Seattle, alleging that Blackstone neglected essential repairs and maintenance, resulting in severe water intrusion issues. The lender claims that Blackstone's failure to act led to approximately $17 million in necessary repairs. According to the lawsuit, filed in New York Supreme Court, Dekabank argues that Blackstone prioritized financial performance over the condition of the property, skimping on maintenance that could have mitigated water damage. Blackstone, however, denies these claims, stating they have responsibly managed the building since acquiring it in 2017 and expressing disappointment in Dekabank’s legal strategy.
Dekabank had provided a $97.1 million loan to Blackstone in 2017 and later refinanced it in 2022, entering a carry guarantee requiring Blackstone to meet 18 conditions to terminate it, including proof of paid operating expenses. Dekabank asserts that Blackstone failed to meet two of these conditions. During an evaluation requested by Dekabank, findings were reportedly alarming, revealing significant damage to the building's facade and necessitating $17.2 million in urgent repairs alongside an additional $13.1 million in reserves. The evaluation noted various deficiencies and deferred maintenance concerns, allowing water to infiltrate numerous areas of the property. The chief engineer reportedly acknowledged ongoing leaks on multiple floors, with evidence of water leakage issues dating back to at least 2018. Dekabank criticized Blackstone for performing inadequate repairs, likening them to “band-aid solutions” that did not effectively address the persistent water intrusion problems.
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