Weekly Market Report - November 11, 2025
- Broker Support
- 2 days ago
- 9 min read
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As New Yorkers voted Tuesday, Vornado Realty Trust CEO Steve Roth reassured Wall Street regarding the election of perceived Democratic Socialist candidate Zohran Mamdani, who led polls against Andrew Cuomo. Roth acknowledged concerns surrounding Mamdani's policies, including rent freezes and increased taxes on the wealthy, but noted no decrease in demand from their clients. Roth stated that affordability in housing has become a crucial issue. Vornado, with significant investments in Manhattan, recently purchased a 383K SF office building for $218M and plans to invest further, including a $350M apartment tower by Penn Station.
The firm is also developing a $4.5B 62-story office tower at 350 Park Ave. Vornado signed 169K SF of office leases last quarter, with occupancy rising to 88%. Funds from operations increased to 58 cents per diluted share, surpassing expectations. Despite a slight post-earnings stock bounce, Vornado's share price fell 2% on Tuesday, down 6% this year. Roth's donations suggest reluctance towards Mamdani, favoring Cuomo instead, while Mamdani criticized Billionaires’ Row, emphasizing affordability for everyday New Yorkers. Roth remains optimistic about future outcomes.
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Vornado Realty Trust is planning to construct a tower on the location of the former Hotel Pennsylvania in Midtown West, an idea that has been in the pipeline for years. CEO Steven Roth noted that prospective tenants have shown interest in substantial space in the proposed tower, situated near Penn Station and Madison Square Garden, although he did not disclose details about the parties involved or the amount of space requested. Roth emphasized that discussions are serious, not merely exploratory. His vision for a tower on this site dates back at least 20 years, with prior plans thwarted by market conditions.
In 2023, Vornado demolished the Hotel Pennsylvania, and analysts estimate a new 2 million-square-foot tower could cost around $4 billion. Given the robust demand for high-end office spaces in Manhattan, this investment may prove worthwhile. Competitors are actively developing new projects, signaling strong market activity. The leasing prices for prime office space have reached $140 per square foot or higher, suggesting that many potential tenants are prepared to invest. Roth indicated that the companies in talks with Vornado recognize the financial viability of leasing high-quality office spaces.
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Plaza District office defaulted on mortgage last month
650 Madison Avenue, a property owned by Vornado Realty Trust, is facing imminent control by lenders after defaulting on its mortgage and entering special servicing. Analyst Alexander Goldfarb suggests the banks will promptly seek to sell the office tower, described as “kryptonite to a lender.” CEO Steven Roth acknowledged the situation during an earnings call, indicating acceptance of the loss, as the firm had already written off its stake three years prior. The building, a 28-story structure totaling 595,000 square feet, was purchased in 2013 for about $1.3 billion. After refinancing in 2019 with $214 million, occupancy has fallen significantly, dipping to 57% in 2024 before rising to 74%. Once valued at $1.21 billion, its current appraisal stands at $950 million, while Vornado reported $453.7 million in revenue for the third quarter, a modest increase of 2.4% year-over-year.
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Midtown office landlord Paramount Group’s CEO Albert Behler could receive a $34 million golden parachute if he successfully finalizes the sale of the struggling business. Paramount, owner of notable Manhattan office buildings, has seen its stock lag due to governance issues. Reports revealed that Behler received undisclosed payments for private jets, personal accounting, and design work. In response to shareholder outrage, the board auctioned the company, with SL Green and Blackstone showing interest but ultimately passing.
In September, Paramount agreed to be sold to Rithm Capital at $6.60 a share—11% below market value—causing further disappointment among shareholders. If the sale is approved, Behler's exit package would exceed the annual pay of SL Green’s CEO Marc Holliday, despite his portfolio being larger. Paramount, with roots tracing back to 1976, employs 316 individuals, and Behler's golden parachute will be significantly larger than that of the firm’s head of leasing. Behler, who became CEO in 1991, played a key role in assembling the current portfolio, which is located mainly north of Rockefeller Center and somewhat inconvenient for commuters.
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The office building at 261 Fifth Ave. has entered special servicing due to the owner's failure to pay off its mortgage by September. The 26-story, 450,000-square-foot building is 82% leased, with tenants such as Himatsingka and DKC Public Relations. The Feil Organization, the owner, could not secure a new mortgage to replace a $180 million loan from 10 years ago. A spokesperson noted they are negotiating for an extension. KBRA mentioned that the "special servicer's workout strategy is TBD." Although the building generated sufficient cash for debt service according to Fitch Ratings, refinancing may occur at a higher rate. Midtown South’s office market is improving, with positive net absorption and increasing demand for prewar towers as vacancy rates remain at 25% in certain blocks, while space leases reach up to $71 per square foot.
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In October, Manhattan's office market saw significant activity, marked by law firm Ropes & Gray extending its lease by 377,000 square feet at 1211 Sixth Ave., while planning a move to 430,000 square feet at 1285 Sixth Ave. Investment firm Sixth Street secured a 103,000 square foot sublease at The Spiral, leading the fifth-largest deal of the month. Overall, about 3.6 million square feet were leased in Manhattan, with notable transactions including Stripe expanding to 139,000 square feet at 28 Liberty St., BGC Group renewing and expanding to 129,000 square feet at 55 Water St., and BakerHostetler renewing 115,000 square feet at 45 Rockefeller Plaza.
Year-to-date leasing has reached approximately 33.7 million square feet, exceeding last year's total and likely to surpass 40 million square feet for the first time since 2019. The availability rate in Manhattan decreased to 14.3%, with the average asking rent rising to $75.18 per square foot. Midtown saw the most activity with 1.5 million square feet of leases, despite lower numbers than previous months. Midtown South experienced a rise in leasing, with a drop in availability to 14.2%. Downtown, typically quieter, had notable leases like those of Stripe and BGC Group, contributing to a total of 687,000 square feet leased, alongside a decrease in availability to 17.5%.
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BGO has relinquished a 26-story office tower at 757 Third Ave., Midtown East, transferring ownership to New York Life Real Estate Investors through a deed-in-lieu of foreclosure agreement, valued at $173.1M, though reports suggest it was closer to $150M. Melanie Domres, president of BGO's NewTower Trust, signed for the seller, while Carter Anatole, New York Life's Director of Transactions, signed for the buyer. The building's occupancy levels are uncertain, but it has attracted tenants like BMS Group and Endava, with over 50K SF still available for lease according to JLL. BGO acquired the property in 2015 for $360M, financing it with a $205M mortgage from New York Life. This transfer is part of a broader strategy by BGO, as it is also selling 101 Greenwich St. in a joint venture with Multi-Employer Property Trust to Quantum Pacific Group for over $100M. BGO and New York Life have not commented publicly on these transactions.
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The American Jewish Committee is selling its longtime Midtown East office building at 165 E. 56th St., seeking approximately $40 million for the 60,000-square-foot property, which has been owned since 1959. The organization plans to relocate, stating that ownership is no longer economically viable. The sale, the site as ideal for a luxury residential conversion due to limited supply in the area. Developers could build approximately 89,000 square feet for a residential building or 112,000 square feet for mixed-use.
The property may qualify for tax incentives like the 467-m office-to-residential conversion or the 485-x for affordable housing. With the potential for a building height of 370 feet (or 379 feet with transit bonuses), this project aligns with recent pandemic-driven trends in Midtown, where other large-scale conversions are also underway, such as the 411-unit project at 845 Third Ave. and a 464-unit project at 675 Third Ave.
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In October, Manhattan office leasing increased significantly, with tenants signing deals for 3.6 million square feet, a 33% rise from September, as reported by Colliers. Year-to-date demand reached 33.7 million square feet, surpassing last year's total, and projections suggest that annual leasing could exceed 40 million square feet in 2025 for the first time since 2019. The largest lease was a 377,000-square-foot short-term extension by Ropes & Gray at 1211 Sixth Avenue, with plans for relocation to 1285 Sixth Avenue.
Fintech firm Stripe followed with a 139,000-square-foot expansion at 28 Liberty Street. The third-largest deal involved BGC Group with a 129,000-square-foot renewal at 55 Water Street. Other notable leases included BakerHostetler's 115,000-square-foot renewal at 45 Rockefeller Plaza and Sixth Street’s 103,000-square-foot sublease at the Spiral building. Overall, availability fell to 14.3%, the lowest since late 2020, while average asking rents rose to about $81 per foot, indicating a tightening market, especially in Midtown South where leasing surged 78%.
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Market still on track to top 40M sf for first time since 2019
In October, Manhattan office leasing increased significantly, with tenants signing deals for 3.6 million square feet, a 33% rise from September. Year-to-date demand reached 33.7 million square feet, surpassing last year's total, and projections suggest that annual leasing could exceed 40 million square feet in 2025 for the first time since 2019. The largest lease was a 377,000-square-foot short-term extension by Ropes & Gray at 1211 Sixth Avenue, with plans for relocation to 1285 Sixth Avenue. Fintech firm Stripe followed with a 139,000-square-foot expansion at 28 Liberty Street.
The third-largest deal involved BGC Group with a 129,000-square-foot renewal at 55 Water Street. Other notable leases included BakerHostetler's 115,000-square-foot renewal at 45 Rockefeller Plaza and Sixth Street’s 103,000-square-foot sublease at the Spiral building. Overall, availability fell to 14.3%, the lowest since late 2020, while average asking rents rose to about $81 per foot, indicating a tightening market, especially in Midtown South where leasing surged 78%.
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More details surface about embattled lawyer’s alternative to bankruptcy
Mark Nussbaum’s former law firms are facing over $400 million in creditor claims during their liquidation process, which bypasses bankruptcy via an Assignment for the Benefit of Creditors (ABC). A fiduciary managing this situation has highlighted challenges due to inadequate records. Approval is being sought to hire forensic accountants to trace assets, primarily banking records and communications. Nussbaum, a real estate attorney, is implicated in criminal charges for grand larceny related to missing escrow funds and has pleaded not guilty.
His financial troubles began when he started running deficits in January, leading to lawsuits, including one from Jacob Sod for $15 million. Nussbaum's business model involved using client escrow accounts to fund real estate deals, leading to allegations of fraudulent practices such as “show capital.” With the liquidation ongoing, his primary asset is reportedly accounts receivable related to loans to real estate professionals, while many of his Chicago properties are in foreclosure. The investigation into Nussbaum's financial dealings is complex.
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Penn District tower now 78% leased
Fintech firm Current is relocating from Chelsea to Vornado’s Penn 2, signing a 10-year lease for over 62,000 square feet on the 23rd floor. The asking rent is set at $125 per square foot. Previously, Current occupied approximately 72,000 square feet at RXR’s 620 Sixth Avenue. Vornado’s chairman expressed confidence in the Penn District's revitalization, highlighted by a recent $750 million renovation of Penn 2, which is now 78 percent leased. Current Real Estate Advisors represented Current in this transaction, while Vornado utilized an in-house team.
As the office market shows signs of recovery, the Penn Station submarket's vacancy rate stands at roughly 19 percent, lower than Manhattan's overall 22 percent. Recent activity at Penn 2 includes a 15-year lease signed by FGS Global for 80,000 square feet and Verizon's agreement for a significant 200,000-square-foot space to establish its headquarters. Other tenants at the building include Madison Square Garden, Major League Soccer, and Universal Music Group, indicating a trend of tenants favoring newly renovated properties in proximity to mass transit.
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Fintech firm’s sublease is latest in a string of large deals at Penn District tower
Steven Roth is making strides with Vornado’s Penn 2, where fintech company Robinhood has signed a 125,000-square-foot, 10-year sublease for the 25th and 26th floors. The lease is from Madison Square Garden and is detailed in CBRE’s October Manhattan office report. This agreement marks the largest leasing activity in Midtown for the month. Penn 2, which recently underwent a $750 million renovation to attract top-tier tenants, is part of Vornado's investment of $1.2 billion to revamp the Penn District. Roth expressed confidence in the area’s growth potential, stating the tipping point has been reached.
Year-to-date leasing in the submarket has increased 23%, totaling 15.9 million square feet. Aside from Robinhood, Fintech firm Current and consulting firm FGS Glocal recently signed leases for over 62,000 and 80,000 square feet, respectively. Other notable tenants include Verizon, which has a 200,000-square-foot lease, Madison Square Garden’s corporate offices, Major League Soccer, and Universal Music Group. The deal signifies ongoing tenant interest in renovated properties close to mass transit, further establishing Penn 2 as a desirable location for businesses.