Weekly Market Report - September 10, 2026
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A building on Billionaires Row, located at No. 224 W. 57th St., linked to investor George Soros, is set for auction due to a foreclosure case involving a $158.7 million judgment against its owner, The Eretz Group. This mixed-use property was once an auto showroom and is currently occupied mostly by Soros's Open Society Foundations. Soros Fund Management, which lent on the property after purchasing the mortgage from Aareal Capital in 2023, has initiated the foreclosure process.
If Soros Fund becomes the winning bidder, it would mark an exceptional scenario where a tenant, Open Society, effectively secures ownership from its landlord, Eretz.Eretz contends that Soros Fund acquired the mortgage to facilitate Open Society’s early lease termination, circumventing substantial penalties it would otherwise face upon vacating the premises before its lease expiration in 2042. Eretz claims that Soros Fund’s $250,000 offer to break the lease showcased "bad-faith conduct." Open Society has occupied 163,000 square feet since 2011, and Eretz, represented by attorney Christopher Milito, argues that external pressures have hindered its ability to repay the mortgage. The auction is scheduled for Tuesday at 2:15 p.m. in Lower Manhattan.
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Meyer Chetrit's recent testimony highlights the drastic decline of the Chetrit Group's previously valued $1 billion real estate empire. In depositions from March and April, he disclosed the company's current valuation as negative $80 million, attributing the previous figure to flawed calculations. Released in connection with Mack Real Estate Group's lawsuit against the Chetrit brothers for defaulting on a $31.5 million mezzanine loan related to the Hotel Carter, the testimonies revealed financial strife; the brothers face judgments totaling over $31 million, which reportedly remain unpaid. Meyer described his office presence as unproductive, with claims of the company being "dissolved" without active leadership.
Despite these challenges, the Chetrit Group managed to secure an $80 million refinancing loan for a warehouse in Queens. Financial burdens are evident in Meyer’s reliance on family for living expenses and unresolved debts to attorneys and an investment advisor. Joseph Chetrit, recovering from health issues, was also deposed. Ongoing legal troubles include a significant judgment linked to a hotel property and accusations of misappropriating tenant security deposits. Additional charges of tenant harassment have been brought against the brothers by the Manhattan District Attorney's office.
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A long-stalled development site at 143-161 E. 60th St. on the Upper East Side is back on the market for $360 million, up from the $300 million it fetched in 2015. The cleared 20,000-square-foot site, now offering about 283,000 square feet of development potential, has various zoning options, including residential or commercial projects, and previously allowed construction of a tower without height restrictions. Developing this ultra-luxury project could require an estimated $500 million in addition to the land cost, pushing total investments to around $1 billion. Alternatively, affordable housing development may range from $100 million to $300 million. Major developers, particularly those active on Billionaires’ Row, have shown interest, with offers emerging about a month after the listing.
The property was initially owned by Chinese developer Kuafu Properties, which had envisioned ambitious designs, including a 1,000-foot tower, but these plans never materialized. Subsequent ownership transfers led to increased complexity, and significant capital remains a barrier for potential new developers. With the seller not desperate for a deal, the next steps depend on securing sufficiently strong investments. The cleared land, coupled with improved market conditions, presents a rare opportunity for reinvention in the Manhattan skyline.
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General Atlantic is making a significant investment by leasing over 150,000 square feet across five floors at the new 625 Madison Ave., a 53-story tower set to open in 2029. This commitment comes as Related Companies' long-awaited project begins construction. The site has a history as the former Revlon building headquarters before Related relocated to Time Warner Center in 2004. Jeff Blau, the current CEO of Related, noted that General Atlantic aligns perfectly with the vision for the site, highlighting the importance of having a prestigious firm as an anchor tenant. Bill Ford, General Atlantic's Chairman and CEO, emphasized that the move is an investment in the firm's future and allows for long-term growth.
Originally, the tower was envisioned to be much taller, at 1,200 feet, but market demands shifted the focus towards office space rather than luxury condos. The new building is situated in a prime shopping area and is part of a trend where new Manhattan developments secure anchor tenants even before breaking ground, paralleling BXP's recent agreements for 343 Madison Ave. Related Companies manages a robust portfolio worth $100 billion, while General Atlantic oversees $130 billion globally.
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The federal government seeks increased autonomy for the General Services Administration (GSA) to allocate funds for urgent repairs on aging buildings, particularly in Manhattan, where four properties face around $1.5 billion in maintenance issues. GSA chief Ed Forst aims to augment the spending limit for repairs without legislative approval from the current $3.96 million to $75 million. The lengthy approval process, averaging 400 days, contributes to a nearly $50 billion maintenance backlog nationally. Significant maintenance needs are evident in buildings like 26 Federal Plaza, which has $785.7 million in repairs needed, and the Ronald H. Brown U.S. Mission, with $129.7 million in issues.
Forst argues that the proposed increase, backed by multiple federal agencies, would streamline necessary renovations. However, some legislators, such as Rep. Jerrold Nadler, oppose this change, viewing it as a potential misuse of taxpayer funds. Additionally, GSA seeks full access to the Federal Buildings Fund, which has been underfunded by Congress since 2011. GSA's broader strategy includes consolidating physical space and disposing of underused properties while emphasizing that renovations might aim to enhance marketability for future sales.
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New York’s office market experienced a historic August, with supply at its lowest level in over five years, registering 65.4 million square feet in Manhattan—one-third below the February 2024 post-pandemic peak of 98.05 million square feet. Significant leases included Havas Health Network at 200 Madison Ave. (254,000 sq. ft.), City of New York at 260 Eleventh Ave. (174,000 sq. ft.), and General Atlantic at 625 Madison Ave. (152,000 sq. ft.). The average asking rent was $77.84, reflecting a slight decline of 0.2% month-over-month but a 4.2% increase year-over-year. Leasing activity decreased to 3.25 million square feet in August, down 16% from July and 12.3% year-over-year.
Manhattan's resilience, as leasing volume remained above historical averages, and availability tightened significantly.In Midtown, companies leased 1.54 million square feet, a 2% monthly increase and 15.8% year-over-year increase, with average asking rents at $84.68. Midtown South saw 1.53 million square feet leased, a 19.6% decline from the previous month, averaging $77.95 per square foot. Finally, Downtown experienced a steep drop to 180,000 square feet leased, a nearly 60.9% month-over-month decline, with average rents rising to $64.46. Overall, supply dynamics reflect a tightening market across all Manhattan sectors.
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Midtown Manhattan is nearing a post-pandemic recovery in its office market, with leasing activity remaining above historical averages and available space reaching its lowest in nearly six years. In August, tenants signed deals for 3.25 million square feet, down 16 percent from July but still notably higher than both the five and ten-year averages. Availability in Midtown is approaching pre-pandemic levels, with 27.86 million square feet available, just 150,000 square feet more than in March 2020. A major lease or several smaller deals could shift Midtown's availability below pre-Covid levels, marking a significant recovery milestone.
Midtown and Midtown South were responsible for almost all leasing activity in August, with notable deals including Havas Health Network’s 254,000-square-foot expansion and General Atlantic's 150,000-square-foot lease at Related Companies’ office tower. Year-to-date leasing in Manhattan reached 29.91 million square feet, a 9.4 percent increase from last year, indicating potential for the strongest leasing year since 2000. Manhattan’s overall availability rate fell to 12.5 percent, with total availability hitting its lowest since September 2020.
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In a busy week, Jeff Blau of Related Companies secured an anchor tenant for an office development and refinanced a key Hudson Yards asset. The company obtained a $421.5 million loan from Bank of America, replacing a previous $400 million loan for 30 Hudson Yards, finalized in mid-August. Related acquired the property in 2019 for $2.2 billion to keep Warner Bros. Discovery until 2034. In 2023, KKR expanded its lease by 220,000 square feet at the building after Meta’s departure. 30 Hudson Yards is near Related’s newest office addition, 70 Hudson Yards, which competes with Park Avenue by attracting major firms amid record high rents.
After securing Deloitte as an anchor tenant for 900,000 square feet in the under-construction tower, Related is negotiating for around half of the remaining space. This 1.1-million-square-foot project is ahead of schedule and expects a temporary certificate of occupancy by summer 2028. Additionally, Related is developing another project at 625 Madison Avenue, where General Atlantic signed a 150,000-square-foot lease, and Veritas Capital will lease 93,000 square feet, both set for completion in 2029. The project aims to add to the limited new Manhattan office developments in the coming years.
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Gary Barnett, head of Extell Development, addressed the Upper West Side community board to counter negative perceptions about his stance on affordable housing, stemming from past controversies, particularly the installation of a separate entrance for rent-stabilized tenants. He presented plans for a 1,200-foot condo tower at 80 West 67th Street, aiming to include affordable housing to foster goodwill with the community after previous legal battles caused headaches during the construction of nearby projects.Barnett's commitment to affordable housing, although not mandated, serves to ensure smoother future developments.
As he approaches his 70th birthday, Barnett, who has significantly influenced New York’s skyline, lacks a clear succession strategy. His children have no connection to Extell, though his nephew, Abba, holds a key position in acquisitions. The firm is recognized for ambitious assemblages, including on Billionaires Row.Community members discussed Barnett's affordable housing proposal, weighing options for on-site versus off-site units. Despite concerns regarding developers’ commitments, Barnett’s track record as a reliable builder reassured the board's decision to recommend a mixed plan. His proactive engagement in the community, alongside Extell’s management, suggests potential continuity and stability for the company post-Barnett.
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The stock price of Empire State Building's owner has dropped to $4.40 a share, the lowest since the pandemic began. Factors include decreased tourist traffic at the observatory and rising interest rates. Long-dated U.S. Treasury bond yields are at their highest in nearly 20 years, influencing mortgage interest rates, which raises borrowing costs for real estate and negatively affects Manhattan office developers. Vornado Realty Trust's stock fell 7% recently, while Empire State Realty Trust's dropped 13%. Higher rates may also increase development costs, as seen in Vornado's $6 billion project at 350 Park Ave. Developers face additional financial pressures from costly renovations and tenant improvements. Although the office sector showed signs of recovery post-pandemic, escalating interest rates could reverse this growth. Meanwhile, tourist visits to the observatory fell by 29% in Q2 2026, contributing to revenue loss, with overseas visitors also decreasing significantly.
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Michael and David Shabsels are selling their entire real estate portfolio, Damis Holdings, after selling their camp empire for over $400 million. The portfolio consists of over 50 assets, including a waterpark and a horseback riding resort, along with various industrial, multifamily, and hotel properties across the U.S. The sale is being managed by A&G Real Estate Partners. This portfolio is a significant part of the Shabselses’ troubled real estate operations, following issues with their camp holdings under Simad Holdings, which faced bankruptcy. Simad recently stopped payments to Israeli bondholders and redirected $34 million to Shabselses-controlled firms.
Both Simad and Damis incurred over $234 million in debt to Merchant Cash Advance companies, prompting bankruptcy filings to protect against withdrawal from accounts. While Simad's summer camps sold quickly, the marketing of Damis properties, including a medical office and a retail center, is expected to be less contentious. The Shabselses had employed a strategy of acquiring properties with ground leases, which allowed them to secure financing through dual mortgages. However, a lender claims they were misled about this structure regarding a $23 million loan, believing the ground lease was controlled by an unrelated third party when it was actually linked to the Shabselses.
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Yitzchok Schwartz plans to develop a rezoned site in Clinton Hill, Brooklyn, after acquiring it from Scott Rechler at a reduced price. YS Developers filed a proposal for three new buildings, differing from RXR's previous plans, which included demolishing six existing properties. The largest project is a 13-story, 159,000-square-foot office building at 33 Hall Street, incorporating a synagogue with separate prayer spaces for men and women. At 1 Hall Street, a 208,000-square-foot mixed-use building with 84 residential units, commercial space, and an underground parking garage for 48 cars is proposed. Another 84-unit building is planned at 4 Ryerson Street.
The overall residential unit count is expected to reach around 425, significantly lower than RXR's earlier plan of 974. RXR sold the entire block development to YS Developers in April for $121.4 million, having originally purchased it in 2016 for $161 million with ambitious luxury office space plans that were stalled by the pandemic. Meanwhile, YS Developers is also working on a residential project at 960 Franklin Avenue in Crown Heights, planning 300 condo units. The Clinton Hill property has been unused since it temporarily housed asylum seekers in 2023.
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When the government acquires part of a landowner's property, many believe compensation is limited to the value of the land taken. However, in partial takings, severance damages to the remaining property are critical. New York’s before and after methodology determines just compensation based on the fair market value difference of the entire property before and after the taking. This valuation can decrease significantly if the taking disrupts property operations. Severance damages might include loss of parking, zoning issues, visibility reduction, and access loss.
Unlike the valuation of the taken land, assessing severance damages often involves expert judgments and legal analysis based on realistic outcomes rather than speculation. The law mandates that property owners receive compensation as if the taking never occurred. Governments often overlook damages to the remaining property, emphasizing the importance of seeking just compensation for all impacts, not just the land directly taken.
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Artificial intelligence is profoundly reshaping business, prompting boards to question returns on investments. While AI can generate significant value, much of it will benefit customers through lower prices and better services, making firm-level ROI misleading. Instead, companies must focus on maintaining competitive positions and the risks of not investing. Investments should be viewed as infrastructure rather than isolated projects, as interconnected data and streamlined workflows enhance AI's efficacy. Competitive advantage hinges on proprietary data, integrated workflows, and robust organizational capabilities. Businesses should prioritize questions about their competitive stance and potential complementary assets over conventional ROI inquiries. Ultimately, AI's returns often reflect ground retained rather than newly gained.
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Operating commercial real estate in New York involves navigating a complex regulatory landscape impacting every building aspect, from safety systems to energy efficiency. Effective regulation implementation relies on industry insights, making collaboration essential. BOMA New York plays a crucial role in this, advocating not just for or against regulations but ensuring policymakers understand their operational implications. Engaging committees, like Codes & Regulations and Energy & Sustainability, facilitate communication between members and regulatory bodies, translating expertise into constructive advocacy. The recent improvement in elevator inspection processes exemplifies the benefits of this collaboration. Moving forward, BOMA New York will continue to leverage industry knowledge to influence evolving regulations on energy performance and building safety to benefit buildings, tenants, and workforce.
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