Weekly Market Report - May 6, 2025
- Broker Support
- 21 minutes ago
- 7 min read
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Brandon Shorenstein was thrust into the top job at his family’s storied real-estate empire during a time of maximum upheaval
Brandon Shorenstein, CEO of, has faced a challenging time in the office market due to the Covid-19 pandemic. The company, which has been one of the few big office owners to keep buying properties, has experienced a downsizing and a 10% staff cut. The company has sold numerous properties for less than their purchase prices and handed over multiple properties to lenders. Shorenstein Properties is not going to collapse or face a bankruptcy filing, but may struggle to raise new money due to its beleaguered track record and declining fee revenue. Dynastic real-estate families have shaped America's city skylines and streetscapes since the late 1800s.
Early family members were European immigrants who started real-estate companies that their children and grandchildren grew into empires. However, these days, real-estate families are competing directly with government funds from the Middle East and Asia, and getting pushed aside by giant investment firms like Blackstone and Brookfield. Some New York families have changed with the times by naming outsiders to fill top executive positions. The Shorenstein real-estate family has played a major role in shaping San Francisco since World War II.
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Firm’s deal to lease nearly three-quarters of Related’s new tower shows renewed strength of ultra high-end office market
Deloitte has agreed to lease nearly three-quarters of a planned New York City office skyscraper, 70 Hudson Yards, to its North American headquarters. The tower, which is the largest ground-up U.S. office development since the pandemic, will occupy around 800,000 square feet. The tower, which is expected to begin in June, is the largest ground-up U.S. office development to start construction since the pandemic. The demand for office space in New York is back at pre-pandemic levels, with 7.9 million square feet of office space in Manhattan leased in Q1.
The lack of new office construction has led to a scramble among financial-services companies, law firms, and technology companies for the same trophy assets. The building will include a large event space, private dining, a media-podcast studio, and "red eye" suites for employees and guests to freshen up after flights. Deloitte will also have use of an 8,000-square-foot terrace at 70 Hudson Yards. The ability to lease most of its new tower before it even breaks ground may encourage other developers, such as SL Green Realty and BXP, to push ahead with their proposed new projects despite the challenges of a global trade war and economic uncertainty.
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Midtown office towers in New York City are facing a discrepancy in vacancy rates, with some buildings struggling to attract tenants. Towers with elevated vacancies are often seen as too far from major rail hubs for commuters, as New Yorkers commute more than an hour per day on average. Real estate experts believe that workers accustomed to working from home are turned off by long train rides, long walks, or even a short subway ride. The office vacancy rate citywide hovers at 23%, and many office properties are falling due to the shift in attitudes towards convenience and social acceptance.
The success of Rockefeller Center is partly due to its proximity to the Grand Central clock. Office vacancy rates in the Financial District are 26%, with Wall Street firms leaving for Park or Sixth. However, buildings farther out, like 9 W. 57th St. and GM Building at 767 Fifth Ave., are 92% occupied due to tenants like Chanel and Apollo Global Management. Companies can use data from brokers to determine how a change in address affects employees' commutes.
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The firm is also repositioning the 70-year-old property
RXR is taking over management and leasing at the Socony-Mobil Building in Midtown, a nearly 70-year-old office building that is losing its largest tenant. The building's owners, David Werner and 601W's Mark Karasick, got a three-year extension on a $525 million CMBS loan last month. RXR is also leading renovations of the lobby and amenity spaces. The company is also buying a 49 percent stake in Ivanhoe Cambridge's 1211 Avenue of the Americas. The building's proximity to Grand Central and views from its top floors make it a desirable location for a new tenant.
Hudson Yards is the city's most expensive neighborhood, with a median home sale price of $5.4 million. Gov. Kathy Hochul announced a handshake deal on a $254 billion state budget, which includes a proposal to bar institutional investors from bidding on single- and two-family homes for the first 90 days they are on the market. A political action committee tied to Airbnb is expected to double its spending on City Council and other races.
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With owner eyeing $1.1B price tag, it could be NYC’s most expensive office deal in years
Blackstone Group is the odds-on favorite to win the bidding contest for 590 Madison Avenue, the Plaza District office tower that went up for sale earlier this year asking north of $1 billion. The private equity giant is among a few investors who submitted a second round of bids for the former IBM Building and are awaiting its owner, the State Teachers Retirement System of Ohio, to award the sale. Other bidders in contention include SL Green, Tishman Speyer, RXR, and RFR, and there is even a high-net-worth private buyer rumored to be in the mix. Blackstone has one big advantage: the company has plenty of dry powder to finance the purchase itself, which would likely introduce an element of counterparty risk.
If the seller hits the target, it would be the first New York City sale to crack the $1 billion mark since Google parent company Alphabet bought its Hudson Square office building at 550 Washington Street for $1.97 billion in 2022. Eastdil Secured is running the sale process and is expected to make a decision on a deal soon. Some of the finalists have recently made office purchases after years of sitting on the sidelines or have been actively distancing themselves from the office sector.
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One-time Manhattan migrant center primed for new chapter
Shahal Khan is attempting to acquire a stake in the iconic Roosevelt Hotel in Midtown Manhattan, which is owned by an affiliate of the Pakistani government. Khan has proposed a joint venture to take control of the property, allowing Pakistan's PIA Holding Co. to retain a 50% stake. The joint venture would sign a ground lease for 99 years and have the option to extend it for another 99. Khan plans to build a 1.3-million-square-foot property on the site by taking advantage of air rights, but the use of the tower has not been disclosed.
The proposal has not received a direct response from Pakistan's government, but the Cabinet Committee on Privatisation is expected to consider it at its next meeting. Khan's Trinity Investment Group proposed acquiring the property from Pakistan in 2020 for $600 million, but was rebuffed. The hotel closed during the pandemic and served as a prominent migrant shelter in the city. In 2023, the city leased the hotel from Pakistan for three years, paying $220 million over the deal. Pakistan tapped JLL to market the hotel on the 43,000-square-foot site, soliciting possible redevelopment opportunities.
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Retailer fended off luxury conglomerate LVMH for 109 Prince Street
Ralph Lauren has acquired 109 Prince Street in Manhattan for $132 million, following a bidding war with luxury conglomerate LVMH. The retail condominium was sold by Swiss investor and art financier Jean-Pierre Lehmann. The luxury fashion company initially leased the property in 2010, opening its Polo Ralph Lauren Store a year later. The lease was due to expire next year. The acquisition preserves Ralph Lauren's presence at the iconic location for many years to come. The deal was assisted by accounting firm Citrin Cooperman.
Lehmann purchased the corner spot in 1991 for $3 million before renovating it. Ralph Lauren fended off a challenge from LVMH, which has been looking for space to relocate its local Tiffany & Co. hub. The company is following one of Manhattan's notable retail trends, becoming the latest company to buy its own storefront outright. Ralph Lauren recently reduced its Plaza District headquarters space at Vornado Realty Trust's 650 Madison Avenue, cutting 100,000 square feet from its lease and reducing rent per square foot by about 30%.
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Resi rentals captured half the city’s biggest financing in March
Lenders in Manhattan have made significant investments in office buildings, with two of the largest real estate loans made in March. The asset class accounted for the two biggest loans made, including Milstein Properties' rebranded 22 Vanderbilt in Midtown and the Woolworth Building in Tribeca. The city's top 10 biggest real estate loans in March included multifamily buildings, a New York University dormitory, a Queens life science building, and a luxury condo project. JPMorgan Chase provided a $645 million loan for Milstein Properties' rebranded 22 Vanderbilt, replacing a $650 million loan from Citibank. The Woolworth Building in Tribeca was refinanced by Blackstone Group, with the debt replacing a previous $256 million issued in 2015. The Housing Development Corporation and Department of Housing Preservation and Development provided $259.7 million to Gotham Organization, Monadnock Development, and Christian Cultural Center for their affordable housing community.
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GCs find work in 485x-spurred resi projects, as conversions kick off, too
New York City's construction industry is not experiencing the effects of tariffs, as most general contractors insist they have not paid a tariff yet. Development timelines stretch across years, and Trump's trade policies are both recent and ever-changing. Currently, there is a 25 percent tariff on steel and aluminum, a matched levy on Canadian lumber, a universal 10 percent import tax, and the escalating trade war with China. However, it is impossible to gauge whether import taxes levied last month will affect new filings that won't break ground until 2027. Developers are struggling to put deals together due to elevated interest rates, higher labor and materials costs, and a persistent bid-ask spread.
Residential development is resurgence, with LBG having a little over 4 million square feet in the works, while Monadnock Construction has maintained its pace year-over-year. The introduction of 485x has helped encourage new residential development, but it is generating less developer interest and much smaller projects versus the predecessor 421a. Affordable builders acknowledge the federal government's cuts to the Department of Housing and Urban Development are worrisome, and the Trump administration is expected to release a budget proposal in mid-May that would slash spending on HUD's affordable housing and homelessness programs.
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