Weekly Market Report - July 29, 2025
- Broker Support
- Aug 10
- 12 min read
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Most of the company’s management employees will be required to report to the office three days a week
Verizon is relocating its headquarters to a larger office in Manhattan, aiming to increase in-office requirements for most of its management employees. The company has leased 200,000 square feet in a recently renovated office tower near Manhattan's Penn Station and plans to consolidate over 1,000 employees currently working in two other Manhattan locations next year. Verizon is tightening its return-to-office policy, requiring management and corporate employees approved for hybrid work to report to the office three days a week, starting the day after Labor Day. This move is expected to boost the New York City office market, which has been recovering from a worst office downturn 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.
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Long Island City's Class A office space, the Factory, was converted into a 10-story tower a decade ago, with the aim of appealing to tenants in technology, advertising, fashion, and media. However, the factory's 73% lease as of April has been a result of rising borrowing costs and difficulties in refinancing the $300 million mortgage due in three months. Tenants include Tourneau and LiveOnNY, a nonprofit that facilitates organ donations. Newer properties, such as the JACX, have also struggled, with several floors being dark after Macy's and WeWork reduced their footprints.
In Manhattan, only 18% of Class A space is available, despite average rents being double those in Queens. Manhattan office buildings are in high demand due to their proximity to commuter hubs and subway stations, while towers more than 15 minutes from public transit often struggle to retain tenants. Leasing activity in Long Island City fell by 24% in the first half of the year, with real estate executives predicting that the neighborhood's reliance on life sciences as a major industry has left it more vulnerable.
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From $580M to $270M: 140 East 45th Street is back on the market
Rockwood Capital is seeking a buyer for the office property at 140 East 45th Street near Grand Central Terminal, which failed to sell in the pre-pandemic days. The property is being marketed by Eastdil Secured's Gary Phillips and Will Silverman, with ownership seeking a price upwards of $270 million. Rockwood took out a $260 million loan from MetLife to refinance the property in 2018, a debt that remains active today. The firm was expecting a price per square foot mark that would put a total sale in the ballpark of $580 million a half-decade later. The building was bought from Boston Properties in 2011 for $401 million, and BXP acquired it for nearly $428 million in 2008 from Macklowe. Tenants include Cigna, Nuvo Group, Deerpath Capital, and Cortec Group, mostly financial, legal, and professional services companies. Rockwood's New York City headquarters are also located in the trophy office tower.
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Law firm Steptoe signs 15-year deal at 1133 Sixth Ave
International law firm Steptoe has signed a lease for 58,000 square feet at 1133 Sixth Avenue, giving it the 43rd, 44th, and 45th floors of the Midtown Manhattan property. The 15-year deal will move Steptoe from Brookfield Properties' 1114 Sixth Avenue, a block south of its new home. The Durst building, which includes a lobby, outdoor plaza, and rooftop space, has a 45-story office building with tenants including Take 2 Interactive, the National Basketball Players Association, and law firm Patterson Belknap Webb & Tyler. In 2021, Durst secured $1.1 billion in debt to refinance office properties at both 1133 Sixth Avenue and 114 West 47th Street.
Office leasing volume in the second quarter hit 9.2 million square feet, an 18.9% drop from the first quarter. However, the borough recorded its strongest first half of the year in over a decade, with tenants signing deals for 20.7 million square feet in the first six months of the year, the most since 2014. In the spring, Masterworks agreed to lease 37,000 square feet on the 57th Floor of 1 World Trade Center, owned by Durst and the Port Authority of New York and New Jersey.
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Qataris plan five-star hotel, residences at Billionaires’ Row property
The Qatar Investment Authority is planning to redevelop the Park Lane Hotel, once the site of one of the largest global fraud scandals, into a five-star hotel, hotel condos, and residences. The plan, which has been brewing for over a decade, began after the 46-story hotel was bought by Qatar's sovereign wealth fund in 2023 from Witkoff Group for nearly $623 million. The hotel was originally intended to be converted into high-end condominiums but was put on hold in 2016 due to the oversaturation of the Billionaires' Row market. The project was revived after Chinese developer Greenland Group bought a 41% stake in the project from Kuwait Strategic Investors.
However, the Justice Department filed a lawsuit to seize the hotel as part of its investigation into Low, who owned 85% of the property and was accused of stealing $4 billion from Emirati sovereign wealth fund Mubadala Investment Company. The QIA plans to redevelop the existing building or demolish it and build new, and it is unclear whether the plans include any neighboring properties. The medical condo building at 30 Central South has been floated as a possible addition to the development site, but no deal has been struck.
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Ohanian’s firm Seven Seven Six to occupy 10k sf at 216 Lafayette Street
Alexis Ohanian, founder of Reddit and Serena Williams' husband, has signed a long-term lease for a 10,000 square foot Soho building, Seven Seven Six. The recently renovated building, owned by Michael and Shany Ashkenazy's 101 Holdings, will be used for the company's flagship office and an experience center. The asking rent is $2 million per year. The Lafayette Street area has become a hub for technology and venture capital firms, with Andreessen Horowitz doubling its space at 200 Lafayette Street and OpenAI leasing 90,000 square feet at Kushner Companies' Puck Building.
Thrive Capital and Microsoft also have offices there. Tech-adjacent companies have been making a comeback in Manhattan after scaling back office leasing and putting millions of square feet on the sublet market after the pandemic. The sector started 2025 with its strongest start in 25 years, with tech tenants inking deals for 1.2 million square feet in the first quarter and adding another 441,000 square feet in April.
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Israeli billionaire Idan Ofer’s Quantum Pacific is taking over the property later this year
BGO, an asset management firm, has filed a lawsuit against tenant Convene at 101 Greenwich Street, alleging that Convene owes $10.6 million after failing to make rent payments since February. The landlord is seeking back rent credited to Convene over the lease due to the tenant's alleged default. Convene occupied 74,000 square feet in 2017 and holds a lease until 2029. BGO reached an agreement to sell the Financial District property to Israeli billionaire Idan Ofer, who agreed to pay over $100 million for the 26-story, 400,000-square-foot property.
The building is 66% leased, with Independence Point Advisors, Moment Technology, and Pro Shop Holdings among its tenants. BGO paid $225 million to acquire the property in 2016 and spent another $75 million renovating it. Ofer is partnering with Nathan Berman's Metro Loft Management and is likely to convert at least part of the property into residences. Ofer partnered with Berman on an $88 million purchase of 767 Third Avenue in November, which is likely to involve another conversion in the offing.
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Despite multifamily boom, retail is still struggling in Westchester
The Waterfront at Port Chester, a retail space in Westchester County, has experienced a 55% drop in valuation from $178 million to $80 million in the last decade, according to Morningstar Credit. The property, developed by G&S Investors, has a 350,000-square foot open-air retail space in Rye, with tenants including a Stop & Shop supermarket, AMC Theaters, Marshall’s, and Michael’s. The property's value fell by 40% during the pandemic, reaching $106 million. Despite a forbearance plan with lenders, occupancy continued to slip, with Bed, Bath & Beyond letting its lease expire in 2022.
The complex's net operating income was $5 million last year, but full balances remain on both loans, making the property worth less than its debt. Morgan Stanley, which originated the loans, is pursuing foreclosure and a potential modification. Westchester County has experienced a multifamily development boom in recent years, with about 12,500 units delivered since 2021, with 15,000 in the pipeline. However, whether this trend will translate to retail environments remains to be seen.
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Visits to the Empire State Building's observatory have fallen for the second consecutive quarter, with nearly 630,000 people visiting the 86th or 102nd-floor viewing decks last quarter, a 3% drop from the previous year. The decline follows a 12% drop in first-quarter traffic to the observatory, which is voted by TripAdvisor users as the No. 1 tourist attraction in the world. Tourism has fallen since President Donald Trump started launching trade wars against both friendly and unfriendly nations. In May, New York Tourism & Conventions reduced its 2025 international visitor projection by 17%, and the Metropolitan Opera reported a fall in international travel attendance.
Statistics Canada also reported a drop in Canadians traveling back over the border in the past year. Wet weather in May and June was also blamed for the drop in observatory traffic. Empire State Realty Trust has lowered its 2025 earnings forecast, with funds from operations projected to come in as low as 83 cents a share. BMO Capital Markets analyst John Kim noted that tourists wishing to take in a bird's-eye view of New York have more options than before.
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Flagstar Bank pursuing $29.5M from the infamous landlord
Steve Croman, a notorious New York landlord, has been hit with a new foreclosure suit, the largest of seven active cases targeting buildings he is connected to. Flagstar Bank claims the property owner owes $29.6 million related to three properties on Stanton Street on the Lower East Side. The seven foreclosure suits are seeking about $51.4 million in principal from Croman and his companies. A temporary receiver has been appointed in five of the cases. Croman is also facing legal action from his former office landlord, who claims the property owner failed to pay more than $1 million in rent on a Noho office space. His father, who has called him a "fraudster," is seeking to dissolve their partnerships. Croman served eight months in prison in 2018 after being convicted of mortgage and tax fraud related to his multifamily buildings. The most recent foreclosure case from Flagstar Bank involves 159, 161 and 193-195 Stanton streets.
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Monthly costs at Carnegie House in Midtown are set to skyrocket, thanks to the wealthy real-estate investors who now own the land beneath the building
Carnegie House, a midcentury brick building in Midtown Manhattan, is facing a 450% annual rent increase due to a long-term ground lease arrangement. The landowner, Rubin Schron and David Werner, has been able to capitalize on the increasing value of the land by charging higher rents for co-ops. The decision, based on the land's value, could push many residents to the brink and force the building into default, causing the owners to lose all their equity in their homes. The landowners, a limited liability company tied to real-estate magnates Rubin Schron and David Werner, deny that they have redevelopment plans and claim that residents were aware of the potential rent increase when they bought their homes. The Carnegie House co-op board is preparing to challenge the rent increase through all available legal channels. The situation underscores the constant threat to affordable housing in New York City and across the country as land values climb.
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The Sofia family, a multigenerational real estate family in New York City, has sold several of its industrial properties for $100 million to self-storage company Storage Post. The sale was part of a bankruptcy protection petition filed by the family in January following the death of one of their brothers and a subsequent financial dispute. The Sofias also sold their storage site at 139 Franklin St. in Tribeca to Broad Street Development and TPG Angelo Gordon for $43.5 million. The company plans to convert the property into a luxury condo building, while Storage Post intends to keep its acquisitions as storage sites.
The Sofia family's deals add to their already sizable portfolio in the city and the company plans to acquire more New York properties in the future. Industrial properties were the only sector of the city's real estate industry to make it through the pandemic unscathed, and they have remained largely healthy since. Leasing activity in the outer boroughs rose to 1 million square feet during the second quarter of the year, while the average asking rent increased to $28.93 per square foot.
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Carnegie Hall's 2023-24 season was a success, with box office revenue reaching almost $20 million, a $3 million increase from pre-pandemic levels. However, Moody's has lowered its outlook for the institution to "negative" from "stable," indicating that the company's solid A credit rating could be lowered in the next six months to a year. The negative outlook is due to thin operating performance, as costs are rising faster than revenues. During the 2023-24 season, revenues exceeded expenses by $2 million, compared to a $10 million surplus in 2019.
Carnegie Hall's chief communications officer, Synneve Carlino, said that financial pressure due to inflation continues to plague the organization. The Met, a major New York arts organization, also received a negative review from Moody's, with expenses running 11% higher than revenue. The Met has lowered its opera production to 18 to keep costs low, but Moody's acknowledges that programs remain relatively high cost and exposure to human capital risks remain elevated.
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Buildings with fewer than 100 units are experiencing a surge in popularity due to the state's strict new wage requirement. Developers filed plans for 41 new projects containing 50 to 99 residential units during the second quarter of the year, totaling 3,214 homes. This increase is 116% from the historical average since 2008, and 11 projects had 99 units exactly, up from five throughout all of 2023. The reason for this spike is likely 485-x, the affordable housing tax break the state passed to replace 421-a as part of last year's budget deal. The program includes a $40-per-hour minimum wage requirement on developments with 100 or more units, which many developers seem eager to avoid paying by keeping their projects just under 100 apartments.
Overall, developers filed plans for 424 buildings during the second quarter of the year, up 28% quarter over quarter and 43% year over year but down 25% from the historical average. Multifamily projects made up 5.9 million square feet of the total. Developers did not completely give up on larger residential projects, filing plans for eight buildings with 100 or more units last quarter. Overall, they proposed 158 multifamily projects with 6,943 units, up quarter over quarter but still below the 12,500 per quarter required to meet the city's goal of building 500,000 new homes over the next decade.
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Los Angeles-based real estate company Hawkins Way Capital has acquired the world's tallest Holiday Inn for $155 million. The 50-story, 492-key hotel, located in the Financial District, includes the adjacent 8,500-square-foot restaurant, the St. George Tavern. The seller was Philadelphia-based GF Hotels and Resorts, which sold the property through Golden Seahorse. The property was developed by Chinese developer Jubao Xie and hotelier Sam Chang in 2014 and was put up for sale in 2017 at a price of over $300 million. The hotel was refinanced instead.
IHG, which manages the Holiday Inn brand, will no longer operate the hotel, and Los Angeles-based hospitality company FCL Management will take over management. Hawkins Way also recently offloaded four timeshare condominium units at 569 Lexington Ave., a former DoubleTree by Hilton, for $85.7 million to the City University of New York. The firm first purchased the former inn from RLJ Lodging Trust in 2022 for $146 million, much less than RLJ's 2010 purchase price of around $332 million.
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A new 450-seat public school is set to be built in Southern Brooklyn by the School Construction Authority, which acquired a 22,000-square-foot lot in Bensonhurst for over $14 million. The property, which includes 7108 and 7120 New Utrecht Ave., along with 1553 72nd St., is bounded by New Utrecht Avenue to the east, 15th Avenue to the west, and 71st and 72nd streets to the north and south. Existing buildings, including a 1-story bank and a former Yeshiva, will likely be demolished to make way for the new classrooms.
The school's parameters, including its estimated 451-seat capacity, are not yet known. The seller, a Williamsburg-based developer, appears to be associated with the Horizon Group, which has developed more than 30 residential and commercial properties in and around the city since 1985. Other developments include a condo project called The Library, a luxury residential building in Bushwick, and an 11-story residential building with 46 units at 125 Chrystie St. on the Lower East Side.
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Manhattan Cardiology, a cardiology firm, has purchased a retail condo at 254 Park Ave. South for $7 million, marking its fifth branch. The firm, founded by Dr. Robert Segal, will open its latest location in the city. The condo was purchased from Harel Insurance, an Israeli firm that bought it in 2011 for almost $16 million. The company has earned a significant income from leasing the space out, but Harel appears to have taken a sizable loss on the sale. The commercial condo, which used to house a Duane Reade, is now closed.
CBRE's Daniel Kaplan and Justin Arzi represented the seller in the deal and declined to comment on the sale. The 13-story building is primarily residential condos with retail space on the ground floor. The trend of retailers owning their spaces in the city is still evident, with Gucci's parent company Kering purchasing 717 Fifth Ave. for $963 million and Prada buying 720 and 724 Fifth Ave. for more than $800 million. However, many smaller firms have also bought their own properties, such as Rosemary's in West Village for $9.3 million and Caudalie in SoHo for roughly $9.8 million last year.
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