Weekly Market Report - March 10, 2026
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- 6 min read
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Banking giant to anchor 2 WTC, Burlington and JPMorgan Chase also lead list
Last month in NYC, American Express secured the largest office lease at 2 World Trade Center, totaling 2 million square feet, overshadowing the other top tenants. Burlington Stores renewed and expanded its lease at 1400 Broadway, increasing its space to 206,000 square feet. The New York City Department of Environmental Protection signed a 20-year lease for 155,000 square feet at 24-02 49th Avenue in Long Island City. JPMorgan Chase expanded its footprint to 139,000 square feet at 5 Manhattan West in Hudson Yards.
Fanatics took over the entire office space at 95 Morton Street with a lease of 105,000 square feet. Linklaters signed a 10-year lease expansion at 1290 Sixth Avenue, totaling 48,000 square feet. Thompson Coburn secured a new 46,000-square-foot lease at 488 Madison Avenue. Groombridge Wu Baughman & Stone signed a 13-year lease for 43,000 square feet at 1185 Sixth Avenue. Nespresso renewed its lease at 111 West 33rd Street for 42,000 square feet, while East West Bank leased 38,000 square feet at 345 Park Avenue.
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Amazon is reducing its office space by eliminating 49,000 desks, aiming to lower its average office vacancy from 31% to under 23% this year. This decision could affect over 14 million square feet of office space, based on a single desk per worker model for 2024. This was announced during an internal meeting shortly before CEO Andy Jassy discussed plans for 0 $200 billion AI investment by 2026 and a recent $50 billion investment in OpenAI. The company has already laid off around 30,000 employees across two rounds to streamline operations.
An Amazon spokesperson stated the company evaluates its office needs regularly, prioritizing spaces that encourage innovation. The plan includes subleasing, terminating leases, and letting some offices “hibernate.” The goal is to achieve a 22.9% global vacancy rate, ideally closer to 11%. Despite downsizing, Amazon plans to add 1.8 million square feet of office space this year. Jassy emphasized a shift in workforce needs due to AI advancements, indicating evolving job roles within the company.
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Lender Wells Fargo grabs property at foreclosure auction
A foreclosure auction on Tuesday led to the sale of Metropole Realty Advisors' 681 Fifth Avenue property for just $100,000, with Wells Fargo as the buyer. Robert Siegel, who attended the auction, refrained from commenting. This marks the first foreclosure loss in Siegel's career, but the situation has been developing over several years. Metropole purchased the property in 2005 for $86 million, situated in a prime retail area. The firm had secured a $215 million CMBS loan in 2016 from UBS and Citigroup, replacing a prior loan due in 2018.
However, in 2023, Metropole fell behind on payments for the high-figure loan, which was worsened by the loss of its major tenant, Tommy Hilfiger, leading to revenue declines. Special servicer Rialto Capital then sued Metropole for missed payments totaling around $2.4 million, triggering foreclosure proceedings. Currently, the property faces over $260 million in defaulted debt. Siegel may have future plans for the site, as he owns adjacent land. There are suggestions he could attempt to reacquire 681 Fifth Avenue to pivot its use from office to residential.
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Real estate private equity firm RXR has secured a $420 million construction loan from Apollo Global Management for the residential conversion of 61 Broadway in FiDi, transforming the office building into a 796-unit residential tower. Construction is set to commence this month, with the initial homes expected by mid-2028. Approximately 200 units will be allocated for individuals earning 80% of the area's median income. The completed project will feature dedicated amenity floors, lounges, storage, and a rooftop terrace with sweeping views of Lower Manhattan and New York Harbor. RXR is also converting other properties like 5 Times Square into housing. RXR's Chairman and CEO, Scott Rechler, emphasized the firm’s capability in handling complex conversions to promote mixed-income housing in the city.
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SL Green has sold the Upper East Side commercial brownstone at 690 Madison Ave., home to high-end jewelry retailer Van Cleef & Arpels, for $54.5 million. Wharton Properties, which previously acquired a 10% stake in the property, was named as a seller; however, the identity of the buyer remains undisclosed. Speculation suggests that Richemont, the parent company of Van Cleef, may have purchased the site. Wharton President Jeff Sutton has effectively encouraged luxury brands to own their retail spaces; he completed significant sales to Kering, the parent company of Gucci and Prada, totaling $1.8 billion.
SL Green took ownership of the property in September 2021 through foreclosure after previous tenant Hermès defaulted, despite carrying $72 million in debt. The firm renovated the property extensively, reopening it in late 2024. The Madison Avenue location's retail rents have risen, averaging $930 per square foot, even as Manhattan's overall rents declined. Van Cleef also operates another Manhattan store at 744 Fifth Ave., and Richemont, known for luxury goods like Cartier, remains a major player in the industry. SL Green maintains a $3 billion market cap and a 93% occupancy rate across its portfolio.
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An investor, George Gellert, has filed a lawsuit against David Berley, chairman of Walter & Samuels, claiming non-repayment of a $3 million loan linked to a Chelsea office building purchase. Berley allegedly defaulted on the loan, which was taken in May 2016 to acquire the 7-story building at 242 W. 27th St. The loan, initially secured by Gellert as a guarantor along with Berley and others, has faced multiple modifications since its assignment to S.A. Funding LLC in 2019, ultimately maturing in June 2025. However, Berley, his son, and other defendants failed to make payments, prompting Gellert to demand repayment through letters that went unanswered.
The building is currently vacant and listed for sale at $10 million. The lawsuit arrives as Walter & Samuels struggles following WeWork's 2023 bankruptcy arrival, significantly impacting their properties. Additionally, the firm has been divesting assets, recently selling multiple buildings on Sixth Avenue for $24.3 million. Berley claims the lawsuit mistakenly names him as a defendant but did not provide further comments. Gellert's attorneys declined to comment on the case.
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In 2023, New York's office sector reflects fears reminiscent of the summer of 2020, driven not by a pandemic but by anxieties over AI's potential to replace white-collar jobs, which threatens demand for office space. According to Evercore ISI, key players like SL Green and Vornado Realty Trust have seen their valuations decline below 2020 levels, with the office sector down 12% this year, compared to gains in other indices. SL Green and Vornado's share prices are down 11% and 14%, respectively, while the Empire State Realty Trust is trading 33% below last year's highs.
Analyst Steve Sakwa highlights legitimate concerns about AI's impact on cash flow projections for office assets. Despite previous investor panic, recent reports suggest a slight recovery, but new data indicate a decline in Manhattan office leasing and rising availability. The New York Times Building recently faced a 40% valuation cut due to tenant loss. Analysts predict a 7% drop in cash flow for the sector, and concerns have deepened following an alarming comment from Otherside AI's CEO about AI's advancements. Overall, confidence in the office market remains shaky amid unresolved challenges.
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Coinbase plans to invest $750 million annually to create a cryptocurrency hub in New York City, with $30 million allocated for office space at SL Green's One Madison. Currently employing over 400 hybrid workers, Coinbase aims to increase its workforce by 630, focusing on roles in security engineering, product development, data analytics, and IT. New York's Empire State Development agency will support this expansion with a $5 million performance-based Excelsior Tax Credit. Coinbase signed an 11-year lease for over 67,000 SF at One Madison and plans to further expand.
An additional floor lease was signed in October 2024, with investments in office transformation expected to enhance recruitment in the coming years. Despite its return to office space, Coinbase aims to maintain a decentralized approach, emphasizing New York's role as a central hub for the global crypto ecosystem and fintech innovation. The expansion reflects confidence in New York's talent and infrastructure, enhancing its digital finance reputation.
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Belvilla, a European hospitality company, is entering the U.S. market by acquiring rights to 10 properties during Sonder's Chapter 7 bankruptcy process, where 79 properties are available. This marks Belvilla's first operational business outside Europe. The company, a subsidiary of SoftBank-backed Oyo Hotels, has begun managing three properties under the Belvilla District 6 brand in Long Island City, Queens, and New Orleans. Real estate investor Peter Papamichael emphasized that this partnership fosters sustainability and long-term benefits for property owners.
Additional properties taken over by Belvilla include locations in Brooklyn, Seattle, Philadelphia, Austin, and Phoenix. Although the specific number of initially operated properties remains unspecified, interest from potential owners is growing, with Belvilla actively pursuing expansion opportunities in the U.S. Sonder, which had about 8,300 units across 152 properties, filed for liquidation after facing severe financial issues, compounded by a failed partnership with Marriott, leading to significant disruption for guests.
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