Weekly Market Report - October 29, 2026
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BXP is advancing its Manhattan office project by partnering with Edmond Safra’s AVRS Partners, which has acquired a 10.6% equity stake in 343 Madison Avenue, valued at $2 billion. This partnership enhances BXP's financial flexibility and opens opportunities for future equity deals. Safra expressed appreciation for their long-term collaboration. Over the summer, BXP secured a $1.2 billion construction loan for its project near Grand Central Terminal, with competitive terms led by Wells Fargo and backed by BofA Securities, Bank of New York Mellon, and JPMorgan Chase.
Despite facing financial challenges, including a 30% dividend cut and the withdrawal of Norges Bank as a potential partner, leasing momentum is increasing. Starr signed a lease for 275,000 square feet in December, later expanding to 320,000 square feet. Additionally, law firm McDermott Will & Schulte leased approximately 150,000 square feet. BXP announced two more tenants are in negotiations, potentially achieving 70% pre-leased status. Construction has reached the podium level, but the building is projected to open in 2029.
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New York’s Class B office market in Manhattan is proving more resilient than expected, according to a report by the Real Estate Board of New York (REBNY). Analyzing 200 Class B properties in Manhattan, Brooklyn, and Queens, the research reveals that average visitation reached 72% of pre-pandemic levels by August 2026 and has consistently remained within this range over the last two years.
New York has over 1,500 Class B office buildings totaling more than 235 million square feet, serving diverse businesses and organizations. The data indicates significant activity, with 41% of analyzed properties achieving at least 80% of pre-pandemic visitations. Midtown led with 89% visitation, while Lower Manhattan and Brooklyn/Queens hovered at around 70%. Properties with experienced ownership and good transit access showed stronger performance, contrasting with those facing significant tenant losses.
The recovery is influenced by broader office market trends, such as tightening Class A availability and increased in-office expectations, although hybrid and remote work still limit overall office attendance. Moving forward, the success of Class B properties will depend on individual conditions, with the potential for modernization or conversion based on tenant demand and market position. Programs and incentives are available to support viable properties amidst ongoing challenges in the office landscape.
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Ken Griffin, Vornado Realty Trust, and Rudin secured a $3.3 billion construction loan for a new office tower on Park Avenue in Manhattan, which faced uncertainty earlier this year after Mayor Zohran Mamdani upset Griffin. The financing was led by Wells Fargo and JPMorgan Chase. Citadel, Griffin's firm, signed a lease for over 1 million square feet in the 66-story building at 350 Park Ave., which will offer 850,000 square feet for leasing. A joint venture was announced, granting Griffin a 60% stake, with Vornado holding 36% and Rudin 4%. Earlier, Citadel's COO suggested halting construction due to Mamdani's proposed absentee homeowner tax. Other lenders include Bank of America and ING.
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Developer Lipa Engel has submitted plans for a new 35-story residential building at 212 W. 29th St. in Chelsea, encompassing approximately 44,000 square feet with 78 units and a 30-foot backyard. Demolition permits have been requested to tear down the existing four-story office building. Architect Lester Woodmere is involved in the project. Engel has also proposed a 21-story, 54-unit building near the Empire State Building after acquiring the site at 47 E. 30th St. for $4.1 million. Additionally, he's purchased a retail property at 3377 Eastchester Rd. in the Bronx for $4.2 million.
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The vacant lot at 45 Broad Street, intended for a supertall condo tower, is under contract for a new owner, as reported by The Real Deal. This 12,600-square-foot site, situated across from the New York Stock Exchange, was previously planned for a luxury condo project by Madison Equities and Gemdale Properties. Although the contract price and buyer remain undisclosed, sources indicate Gemdale sought around $60 million. In 2015, Madison Equities purchased the site for $86 million, and in 2016, Gemdale acquired an 81.3% stake for $69.9 million.
Initially, a 1,100-foot tower with 226 condos was envisioned, with unit prices ranging from $2 million to $3 million. The project's design included 9,000 square feet of ground-floor space. Despite securing $168 million in financing between 2019 and 2020, the project was suspended during the pandemic. In 2023, Gemdale proposed a revised development plan for a smaller 52-story, 302-unit building, with Lendlease as the construction manager. The property, marketed as a development opportunity, is one of the last sites eligible under the former 421a tax abatement, with preliminary groundwork completed.
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Manhattan’s office leasing remains robust, benefiting landlords, although attracting new tenants incurs high costs. Tenant incentive packages, which are payments offered by building owners as deal sweeteners, have reached record levels, surpassing $90 per square foot in early 2026, according to CompStak. This marks a notable acceleration after a nearly 30 percent increase from 2019 to 2022, followed by steady levels until last year. The growth is fast-tracked by rising construction costs, potentially pushing incentives higher. While the leasing boom primarily targets high-end markets, lower-rent leases are driving incentives.
CompStak's Alie Baumann notes that TI allowances are at all-time highs in nominal terms, with a shift towards lower-rent deals as top-market packages decrease from 2024 peaks. Despite these trends, tenant incentive costs continue to challenge office investors, who ideally seek to gain leverage in tighter markets. Manhattan is projected to achieve approximately 44 million square feet of leasing this year, marking the highest activity since 2000, but maintains a 12.4 percent availability rate, reflecting a tenant’s market, with considerable demand for top-tier spaces. Average incentives for leases under $100 per foot have also reached unprecedented levels.
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Aby Rosen's $175 million bond sale tied to the mortgage of RFR’s Midtown office building at 475 Fifth Avenue was postponed due to a challenging interest rate environment. Originally slated for pricing weeks ago, the bond offering, co-sponsored with Pacific Coast Capital Partners and marketed by Mesirow Financial, included a $74 million AAA-rated tranche with a spread of approximately 1.80 percentage points over the benchmark. RFR had recapitalized the property in February after a foreclosure threat, securing a three-year, $160 million loan and equity from unnamed partners.
JPMorgan Chase and Citigroup provided financing to replace a $180 million mortgage. RFR, alongside Penske Media Corporation, acquired the building in 2022 for $290 million, backed by a $260 million loan. As of early September, the property was 93.4% occupied, revealing the struggle to attract investors in commercial real estate despite perceived security.
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SL Green is nearing a settlement regarding ongoing disputes at 2 Herald Square, following a legal battle that began when the company sued Victoria’s Secret for back rent after the store closed during the pandemic. A judge ruled in favor of SL Green, awarding $50 million. However, TIAA and Norges Bank, owners of the land beneath the property, later sued SL Green for money owed from this judgment, claiming entitlement to $24 million in unpaid ground lease payments. SL Green announced a framework for a settlement with TIAA and Norges, though specifics were not disclosed.
TIAA previously purchased fee interest in 2014 and SL Green acquired the ground lease after a foreclosure. In 2024, SL Green took a 95% stake in the leasehold for $7 million while the property had low occupancy. TIAA claimed SL Green owed $30 million in back rent, taxes, and fees, declaring SL Green in default in December 2024 and terminating the lease the following month. SL Green contested the termination, citing struggles due to the commercial market downturn. The leaseholder retains the option to purchase the building next year at a fixed price.
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Elie Schwartz's former Soho office building, located at 300 Lafayette Street, recently secured an $85 million loan from Hudson Bay Capital Management via InterVest Capital Partners for debt refinancing, replacing an earlier loan of the same amount from InterVest before its ownership takeover. The Newmark team, including Jordan Roeschlaub, Nick Scribani, and John Caraviello, facilitated the deal about a month ago. InterVest purchased the property for $132.5 million in May 2025, previously partnering with Nightingale on its leasehold.
In 2023, TPG Real Estate Finance claimed about $129 million was owed, endangering Nightingale's ownership, but InterVest intervened by acquiring a $143 million note. InterVest had previously collaborated with Nightingale to obtain the leasehold in 2019. Microsoft leases over 60,000 square feet of the building until late 2034 at rates of $102 to $125 per square foot. Additionally, Stellar Management's One Soho Square faces potential mortgage issues amid rising vacancy rates.
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Construction spending in New York City is projected to reach nearly $80 billion this year, marking a $10 billion increase from 2025 and a 16% rise from the past three years, according to the New York Building Congress. The residential sector is the primary driver, with around 31,500 new units expected to be authorized, significantly higher than the previous five-year average of 20,000 units, aiming to alleviate the affordability crisis.
The growth is attributed to large-scale rezonings, housing reforms (City of Yes), and office-to-residential conversions. Residential spending alone should hit $27 billion, an increase of nearly $8 billion from last year. Over the next three years, total construction spending is predicted to be approximately $243 billion, with $83.2 billion for residential. Nonresidential construction is also on the rise, with casino developments contributing significantly. Construction employment may reach 142,855 by year-end.
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111 W. 57th St. stands as the skinniest and tallest tower among the Billionaires Row supertalls. A judge will soon determine if bribery influenced its construction, following a lawsuit from Ambase Group against developers Michael Stern and Kevin Maloney. Ambase claims its $70 million investment was lost after the developers allegedly accepted bribes related to improper foreclosure. Stern and Maloney deny these allegations.
A new lawsuit accuses an Apollo Global Management-affiliated lender of depleting cash assets to evade a potential $400 million judgment. The Billionaires Row tower began construction in 2014, stalled in 2016 but experienced increased sales, with 98% of units sold by spring 2023. Despite requests for summary judgment from both sides, Judge Cohen opted for a bench trial to ascertain if the developers acted unlawfully. Elan Dobbs, Maloney’s attorney, has stated there is no evidence of bribery.
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