Weekly Market Report - November 18, 2025
- Broker Support
- 1 hour ago
- 9 min read
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Amazon is laying off nearly 700 corporate workers in New York City as part of a larger workforce reduction that totals 14,000 positions. The layoffs affect 233 employees at the Manhattan West office and 182 at the New York Tech Hub, with additional cuts at seven other locations in Manhattan. The current number of Amazon employees in New York is unclear, but Mayor Eric Adams noted in 2023 that the company had created 18,000 jobs in the region, including 2,000 at its hub in the former Lord & Taylor Building. Amazon has also made significant real estate investments in the area, acquiring several prominent properties over the last few years. Further details on the layoffs were not provided.
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As more properties flip to housing, displaced firms are filling what’s left
Lower Manhattan's shift towards residential conversions is not pushing out office tenants but rather keeping them within the area. Many displaced office users are relocating to other buildings in Lower Manhattan rather than moving to Midtown or Brooklyn. This trend has contributed to a significant increase in leasing activity, with current figures showing more than double the leasing volume compared to last year. Since 2020, over 5.5 million square feet of office space has been converted to housing, with an additional 5.8 million square feet potentially facing similar changes, leading to a tightening of available space.
New York’s tax incentive program for property owners encourages these conversions, which has pressured developers to expedite processes, often resulting in short notice for tenants. As a result, firms like Arup and Lewis Brisbois have relocated to Class A spaces nearby, demonstrating that tenants are increasingly prioritizing building quality despite facing the risks of future conversions. However, companies remain cautious, wary of moving into properties that may also be designated for conversion.
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Citadel-anchored Midtown building to span 2M sf
Vornado Realty Trust has submitted a construction permit application for a new 62-story office tower at 350 Park Avenue, developed in partnership with Rudin Management and Citadel, located between East 50th and 51st streets. The project spans over 2 million square feet, with Citadel committing to lease 850,000 square feet at an initial rent of $36 million, retroactive to 2022. The project received approval from the Department of City Planning in September, paving the way for the demolition of three existing buildings, including a 30-story office tower.
Plans include a 12,500-square-foot public plaza and 16,000 square feet of retail space. Michael Ritchie of AAI Architects filed the permit, with Foster + Partners also involved, known for their work on similar projects. The development follows the 2017 rezoning of Midtown East, allowing landmarked buildings to transfer development rights. In 2023, Citadel acquired air rights from St. Patrick’s Cathedral at $312.50 per square foot. Renderings depict a visually striking design with a staircase-like profile and expansive windows.
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Barry Sternlicht, the billionaire CEO of Starwood, expressed concern that Mayor Zohran Mamdani's policies may lead to people, including his employees, leaving New York City. Sternlicht highlighted Mamdani's criticism of the NYPD as a potential factor in this migration, emphasizing public safety fears. While Mamdani plans to maintain the current police force and create a Department of Community Safety to address mental health and homelessness, his approach contrasts with the previous administration's goals of increasing police numbers.
Sternlicht criticized Mamdani's policies on rent control and tenant protections, warning that freezing rent could drive landlords away and exacerbate housing shortages. He also pointed out that requirements imposed by unions significantly inflate construction costs in the city. Sternlicht shares concerns with other business leaders regarding Mamdani's administration, noting the tense atmosphere in the corporate community post-election. Although acknowledging his apprehensions, Sternlicht is open to giving Mamdani a chance, expressing hope that New York City will endure the challenges ahead, despite expecting a decline before improvement. A representative from Starwood declined further comment.
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Record-high luxury hotel rates did little to dull traveler demand for exclusive ocean resorts and grand hotels
America's polarized economy is influencing the lodging sector, particularly luxury hotels, which are charging record premiums. Despite a decline in foreign tourism and some job losses in corporate sectors, affluent travelers are indulging in their stays, driven by wealth gains from stock and real estate markets. The average daily room rate for U.S. luxury hotels has reached a historic high of $394, a significant increase from $226 in 2008. Demand for luxury accommodations remains strong, with bookings rising 2.5% compared to last year, while mid-tier hotels have seen a decrease in occupancy. Montage International plans to double its portfolio, as revenue has increased by 8% this year.
The disparity in pricing is evident, with ultraluxury hotel rates often exceeding double that of typical luxury prices. For instance, in Paris, ultraluxury rooms cost about $2,600, while luxury rooms average $1,000. Wealthy Americans are prioritizing travel experiences, often opting for large accommodations for multigenerational trips. However, global economic pressures are starting to impact some luxury hotel profitability. For example, Corinthia Hotels reports flat profitability, even as U.S. locations like its Surrey hotel in Manhattan command prices exceeding $2,000 per night, reflecting a commitment to exceptional service and personalized experiences.
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Rudin has agreed to extend the mortgage for 32 Sixth Ave. for four years, committing to improve the 1.2 million square-foot building that is 40% vacant. Neil Gupta, Rudin’s president, expressed gratitude to the lender for their collaborative approach. The $425 million mortgage due this month has been extended to 2029, with the lender likely being Deutsche Bank, as noted by Fitch Ratings. In return for the extension, Rudin will invest $100 million in capital improvements and a leasing program. Planned upgrades include transforming large areas into new work environments of 5,000 to 10,000 square feet, enhancing the lobby and storefronts, and establishing a showroom on the 25th floor. Rudin, a prominent New York real estate family, owns 14 million square feet of property and acquired 32 Sixth Ave. in 1999.
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In March, developer Aby Rosen sought a partner for his 285 Madison Ave. property, which he had upgraded with nearly $80 million since purchasing it for $190 million in 2012. The office tower was in default since early 2024, with Rosen seeking an additional $35 million to remain competitive amid a recovering Manhattan office market. Demand surged, particularly for properties near Grand Central Terminal. In his letter to Ocean West Capital Partners, he implored them for a strategic partnership, but the firm declined and acquired the building for $132 million at a foreclosure auction a month later.
Rosen subsequently alleged the auction was "rigged," while Ocean West labeled the litigation a "shakedown" in court filings. Rosen's firm, RFR, previously sold 980 Madison Ave. for $560 million but faced setbacks, including defaulting on rent for the Chrysler Building. He invested significantly in 285 Madison, which carries $475 million in debt, and projected its net operating income would halve without the improvements he sought. With many tenants’ leases expiring soon, the building's future appeared bleak, as he projected its value might drop to $177 million. Following a competitive auction process, Ocean West plans to enhance the property by investing in its common areas, including a new entrance and amenities.
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Fred Ohebshalom, a Manhattan landlord, has raised $10.5 million by refinancing six apartment buildings, where one-third of the rents are regulated. This amount mirrors the $10.1 million owed on his Midtown office building, currently facing foreclosure. Ohebshalom, founder of Empire Management, has managed around 4,000 apartments and 1 million square feet of commercial space since 1975. He has previously faced legal issues, including a $1.25 million fine for maintenance violations. Despite challenges, including a contentious relationship with his son, Richard, and declining values of rent-stabilized apartments, Ohebshalom's residential buildings remain largely occupied. With 93% occupancy and an average rent of nearly $3,000, they were recently appraised at $86 million, allowing for a new $49 million loan from LMR Commercial. This refinancing could serve to address his current financial obligations or be allocated elsewhere, amid ongoing challenges in the Manhattan real estate market, particularly for office spaces.
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JPMorgan Chase provides acquisition financing for 205 East 42nd Street
David Werner Real Estate Investments and 601W Companies acquired 205 East 42nd Street in Midtown East from the Durst Organization for $165 million, raising speculation about a future conversion. The purchase, reported by the Commercial Observer, equates to $310 per square foot, financed in part by a $100 million loan from JPMorgan Chase. financing support from Jordan Roeshlaub and Nick Scribani. Current tenants include the City University of New York, Fedcap Rehabilitation Services, and the United Way of New York City. The building underwent a $15 million renovation in 2013, enhancing its facilities and adding green roofs. Originally developed in 1927 with a 532,000-square-foot footprint, the upper floors are vacant, potentially suitable for residential use or a dedicated office tenant. Werner has a history of office-to-residential conversions, including notable projects in Midtown East.
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Partners purchased $100M in loans tied to buildings from Flagstar
Hines and Rialto Capital Management are involved in a private foreclosure fight against Hilson Management over three Midtown Manhattan office buildings owned by the Schwalbe family. The partners filed lawsuits last week in Manhattan state Supreme Court to initiate the auction process for these properties. Significantly, the legal proceedings are not publicly accessible, as online versions of the complaints are restricted to registered attorneys, and there has been no response from the court’s media office regarding inquiries. The Schwalbes declined to comment, and neither Hines nor Rialto provided feedback on the situation.
Hines and Rialto initially closed on a $2.5 billion commercial real estate credit fund last fall, accumulating around $700 million for capital deployment, specifically for loans secured by quality office buildings nationwide. They purchased $99.8 million in Midtown office debt, originally from Flagstar Bank, related to the three buildings: 185 Madison Avenue, 5 West 37th Street, and 349 Lexington Avenue. CoStar reports indicate these properties are at least 90 percent occupied, with the West 37th Street location fully leased.
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Bank, joint venture looks to sell Midtown East property amid luxury hotel boom
Andrew Farkas' Island Capital is selling the landmarked Lexington Hotel in Midtown East, seeking around $275 million. The 725-key hotel, which opened in 1929 and received landmark status in 2016, has historical significance, previously hosting celebrities like Marilyn Monroe and Joe DiMaggio. The hotel’s location is pivotal as it remains one of the last significant “big-box” hotels in Midtown, especially as competitor inventory has dwindled due to closures and repurposing, including former hotels transformed into student housing. This sale comes amid a resurgence in New York's hotel market, with occupancy rates approaching pre-pandemic levels, exceeding 84% in 2024. Yet, challenges persist, including rising labor costs and interest rates. The hotel reopened under the Marriott International Autograph Collection brand after renovations post-pandemic, following its acquisition for $185 million in 2021. Eastdil Secured is marketing the property as potential owners eye the growing influx of visitors to the area.
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Convene Hospitality, Equinox inked 50K sf deals
Last month, the competition for the largest retail lease among New York's five boroughs was close, culminating in a tie for first place. The two largest leases, each spanning 50,000 square feet, were secured in the same Chelsea building at 261 11th Avenue: one by Convene Hospitality Group and the other by Equinox. Both leases were facilitated by various real estate teams representing the tenants and landlords, including Columbia Property Trust, L&L Holding, and Cannon Hill Capital Partners. Following these, Chelsea Piers Management signed a 29-year lease for 48,800 square feet at 200 Varick Street in Soho. Burlington Stores secured 42,600 square feet at 72-22 Broadway in Jackson Heights, with plans for a September 2028 opening. The New York City Charter School of the Arts committed to 34,500 square feet at 241 Water Street, while Din Tai Fung took 20,000 square feet at 567 Fulton Street. Additional leases included Callen-Lorde, Ivy Prep Early Learning Academy, STK, Selene by Kyma, and Max Deals, each representing smaller but significant transactions.
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Also: Stripe and Richemont ink 100K sf-plus deals
In October, AI firms significantly influenced office leasing in New York City, with two featured among the largest office leases. BlackRock secured the top spot by expanding its presence at 50 Hudson Yards with a new sublease from Meta, totaling 194,000 square feet. Stripe followed closely, leasing 139,000 square feet at 28 Liberty Street in the Financial District, which increased its footprint to 286,000 square feet. Richemont, a Swiss luxury retailer, expanded further with 138,000 square feet at 645 Fifth Avenue.
Notably, Harvey AI Corporation signed a new lease for 93,000 square feet at 1 Madison Avenue, while Scale AI took a sublease for 80,000 square feet at 1 World Trade Center. Plaza College, FGS Global, and Lewis Brisbois Bisgaard & Smith each signed leases of 80, 80, and 70,000 square feet, respectively. The New York State Office of General Services also expanded with 66,000 square feet at 919 Third Avenue. Other notable leases included Bilt, Verra Mobility, and Teneo Holdings, contributing to the dynamic leasing landscape driven by the growth of AI and tech sectors in urban environments.
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Morgan Stanley, Société Générale originate 10-year CMBS loan
Manhattan's office market is nearing its strongest leasing year post-pandemic, attracting investors. Jack Resnick & Sons secured $147 million in commercial mortgage-backed securities for its 255 Greenwich Street building, as reported by the Commercial Observer. The 10-year loan, provided by Morgan Stanley and Société Générale, will refinance existing MetLife debt on the 600,000-square-foot property developed in 1987. Despite market challenges, the building has maintained strong leasing with notable tenants like Pearson VUE and renewals from multiple city government offices. October's leasing activity increased to 3.6 million square feet, raising year-to-date demand to 33.7 million square feet, indicating a potential for exceeding 40 million square feet for the first time since 2019.
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