Weekly Market Report - September 17, 2026
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In 2001, lower Manhattan was devastated by the Sept. 11 terrorist attacks, which resulted in nearly 3,000 deaths and the destruction of the World Trade Center. As the 25th anniversary approaches, lower Manhattan has significantly transformed, with its population tripling and over 230,000 people now working in the area, nearly matching pre-attack levels. The shift from banking to media and tech companies has revitalized the once-blighted Financial District.
In contrast, San Francisco faces struggles as its downtown site of the former San Francisco Centre mall, a once-thriving retail hub, has fallen into disrepair following the pandemic. Now back on the market, the mall is expected to sell for around $130 million, a stark decline from its $1.2 billion valuation a decade ago. This gap highlights the challenges many American downtowns face in transforming their business districts. Meanwhile, lower Manhattan has received approximately $20 billion in public and private investment for rebuilding, which includes extensive office and retail space, a transportation hub, and the 9/11 Memorial and Museum, showcasing a successful recovery trajectory amid ongoing challenges elsewhere.
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The prewar office building at 1140 Sixth Ave. is strategically located near Grand Central Terminal and Bryant Park, marketed as a high-quality Class A property after a renovation 15 years ago. However, it faces severe financial distress, with investors likely to lose 98% of their $99 million mortgage investment, according to KBRA. The building's impending foreclosure results from mismanagement under Nicholas Schorsch, who acquired the property through nontraded REITs but later faced multiple investigations, including an SEC probe for accounting fraud.
After selling most of his business to Apollo Global, which fell through amid regulatory issues, Schorsch resigned from multiple boards and settled with the SEC for $60 million. Despite some initial occupancy success, by 2016, the building required significant cash infusion to refinance its mortgage, reflecting market distrust. Post-pandemic vacancies skyrocketed, leading to the company's name change in 2023, signifying struggles in the New York office market. Currently, American Strategic Investment Co. reports substantial doubt about its future viability, with a drastically reduced portfolio. Foreclosure proceedings have commenced, with the property’s value plummeting to $15 million, marking a stark decline for what was once viewed as a prime investment.
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1411 Broadway, a Class A office tower in Midtown Manhattan co-owned by The Swig Company, has secured new leases totaling 182,044 s/f with Zeta Global, Republic Clothing Corp., and Amorepacific. This contributes to 566,000 s/f leased over the past 18 months, boosting projected occupancy to 90% following a $100 million repositioning. Zeta Global signed a 10-year lease for 50,522 s/f, relocating its NYC headquarters, committed to a 15-year lease for 81,000 s/f across multiple floors, with representation from Savills.
Amorepacific will relocate its headquarters with a 10-year lease for 50,522 s/f, Improvements include a renovated plaza, new entrance, upgraded elevators, and a redesigned lobby featuring significant artwork. Future developments include a rooftop amenity set for completion in 2028. Additional leasing includes renewals and expansions from Jacques Moret and Withum, showcasing significant leasing momentum and strategic investments.
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The stock price of the Empire State Building's owner has fallen to $4.40 a share, the lowest since March 2020, due to declining tourist traffic and rising interest rates. Tourist visits to the observatory decreased by 29% in Q2 2026 compared to the previous year, significantly impacting revenue. Overseas tourist numbers have dropped notably, with CEO Tony Malkin noting a decline from 60% to under 40% of visitors recently. Concurrently, yields on long-dated U.S. Treasury bonds reached their highest level in nearly 20 years, affecting real estate interest rates and increasing borrowing costs for Manhattan office developers.
As a result, Vornado Realty Trust’s stock fell 7%, while Empire State Realty Trust’s saw a 13% drop. Higher interest rates worsen development costs, exemplified by Vornado’s $6 billion project with Ken Griffin, which may see increased financing needs, and BXP potentially needing to offer a larger stake for its $2 billion project at 343 Madison Ave. Additionally, rising tenant improvement costs further strain cash flow that could otherwise benefit shareholders. Although the office sector had begun to recover, these rising rates threaten to reverse progress, as noted by analyst Steve Sakwa. Despite the iconic status of the Empire State Building, its financial health is increasingly jeopardized by external economic pressures and tourism trends.
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Manhattan's office market shows significant progress beyond its post-pandemic recovery. In August, 3.25 million square feet were leased, exceeding the five-year and ten-year monthly averages by 13 and 16 percent, respectively. Although leasing fell 16 percent from July, overall activity remains robust, with 29.91 million square feet absorbed year-to-date, a 9.4 percent increase from last year, positioning 2026 for record office leasing. Midtown's available office space dropped to 27.86 million square feet, close to pre-Covid levels.
August leasing was heavily concentrated in Midtown and Midtown South, totaling 3.07 million square feet. Manhattan's overall availability decreased to 12.5 percent, with total available space at 65.4 million square feet, the lowest since September 2020. Notably, sublease inventory dipped to 10.07 million square feet, the lowest since August 2019, indicating a reduction in pandemic-related excess space. Average asking rents fell slightly by 0.2 percent from July but remain up 4.2 percent from the previous year. The key challenge ahead is whether Manhattan can translate this supply recovery into a sustainable pricing and investment rebound, making the post-Covid office reset more impactful than merely statistical.
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7 World Trade Center, completed in 2006, was the first office building rebuilt after 9/11 but faced a boycott from politicians during its ribbon-cutting ceremony. Developer Larry Silverstein signed a $3.2 billion lease for the World Trade Center complex shortly before the attacks and quickly devised plans for reconstruction, engaging prominent architects and engineers. Despite skepticism about building without an anchor tenant, construction began in 2002 and the 52-story tower was finished in 2006, leading to a well-attended but politically boycotted opening.
However, within months, Moody’s became a major tenant, validating Silverstein’s approach. Today, the Financial District has transformed, housing diverse tenants like Moët Hennessy and law firm WilmerHale, with 7 World Trade Center currently 95% leased. Initially, to counter vacant spaces, artists were invited to create works on the building’s walls; they eventually moved to other nearby structures as more projects completed, continuing the artistic revival in the area.
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New York is evaluating a $100 million property tax break for Tishman Speyer's proposed 48-story skyscraper at Hudson Yards, the largest subsidy since Mayor Mamdani's inauguration. The Economic Development Corporation will vote on the measure, supporting a $2.7 billion project scheduled to begin construction in January. Critics argue the subsidy benefits the wealthy and diverts funds from essential services.
The tax benefits would cost the city $92.2 million while generating nearly $860 million in tax revenue. Mamdani's economic agenda focuses on affordability, contrasting with previous administrations' tax breaks for developments. Despite past setbacks, Hudson Yards has become a prime area for top firms, with high rental prices, while the city has received about $2 billion in surplus revenue from developers. Advocates assert that the project is vital for job creation and economic growth.
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General Atlantic and Veritas Capital Fund Management have signed leases at 625 Madison Ave., a major Midtown office development by The Related Cos. General Atlantic will occupy over 150,000 square feet across five floors and will establish its global headquarters there in 2029. Related CEO Jeff Blau emphasized the firm as an ideal anchor tenant during the design phase. Veritas Capital will lease approximately 93,000 square feet. These leases mark a significant milestone for the 53-story, 858,500-square-foot project, expected to be completed by summer 2029. Related purchased the property for $632.5 million from SL Green in 2023. No comments were received from Veritas regarding their lease.
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The Chetrit family's once-thriving real estate empire is diminished after several buildings were lost to bank foreclosures. The property at 428 Broadway, targeted by a lender for a $60 million mortgage, was expected to face similar fate through a court-ordered auction. However, Michael Chetrit, the head of Chetrit Organization, secured a buyer just before the auction, effectively alleviating his debts. Jean-Marc Donics, head of Tortuga Equities, purchased the property for $47 million cash on Aug. 18.
The building, once leased to WeWork, is currently vacant and in poor condition. Chetrit’s firm acquired the site for $22.5 million in 2005, later using it as collateral for the mortgage. Despite a legal battle resulting in a $40 million judgment favoring LoanCore, Chetrit managed to obtain the building through a $1 million payment at auction. Meanwhile, the Chetrit family faces struggles across its portfolio, with further legal issues arising from other properties, indicating ongoing financial difficulties for the family’s real estate ventures.
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Pickleball continues to be the fastest-growing sport in the U.S., increasing its real estate presence. Notably, two pickleball leases appeared among New York City's largest retail transactions last month, which also included various fitness and apparel brands, though none topped the list. 1) Chelsea Piers Fitness at 250 Water Street (Seaport) secured a 76,000 sf lease for five floors. 2) Burlington leased 44,000 sf at 458 86th Street (Bay Ridge). 3) Zara signed on for 22,000 sf at 184 Bedford Avenue (Williamsburg). 4) Goodland Pickleball signed a lease for 15,500 sf at 98-22 Queens Boulevard (Rego Park). 5) Another Goodland Pickleball location occupies 14,600 sf at 105 North 13th Street (Williamsburg). 6) Planet Fitness leased 14,500 sf at 532 Neptune Avenue (Coney Island). 7) Muji signed a 10,000 sf lease at 100 Flatbush Avenue (Boerum Hill). 8) Samudhra secured 10,000 sf at 312 West 43rd Street (Midtown West). 9) Whole Foods Market leased 9,000 sf at 509 Third Avenue (Murray Hill). 10) Madewell took a 7,300 sf lease at 1 Rockefeller Plaza (Plaza District). 11) Crab House contracted for 6,500 sf at 11 East 13th Street (Greenwich Village).
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SL Green is selling a SoHo building for over $225 million, part of its $2.5 billion selloff strategy. The company has agreed to sell 110 Greene Street to the Natora Group for $226 million. Natora is acquiring the property, comprising retail and office spaces, via a 1031 exchange using proceeds from selling industrial buildings to Blackstone. The sale translates to more than $1,000 per square foot for the 13-story, 223,000-square-foot asset, where Balenciaga operates as the main tenant. Eastdil Secured facilitated the transaction. This sale follows SL Green's strategy in response to rising interest rates, having previously sold various properties, including a minority stake in 100 Park Avenue and 10 East 53rd Street.
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Acadia Realty Trust has significantly increased its retail acquisitions in Soho, purchasing two adjacent mixed-use properties at 69 and 71-73 Greene Street for $60 million from JSRE Acquisitions. Each five-story building, which has approximately 16,500 square feet, combines retail and residential spaces, with streetwear brand Amiri occupying the ground floor. Previously, these properties changed hands in 2012 for $32.6 million.
While details on the brokers are unclear, Acadia's aggressive strategy includes recent sales such as 640 Broadway in Noho for $49.5 million and notable acquisitions in Soho, including a Givenchy-anchored retail condo for $44 million and a Moschino-anchored retail condo for $25 million. Expanding beyond Soho, Acadia recently acquired four storefronts on Madison Avenue for $20.7 million and retail buildings in Williamsburg for $50 million. Concurrently, JSRE purchased a mixed-use property at 713 Madison Avenue for $40 million. Notably, Greene Street remains active, with SL Green agreeing to sell 110 Greene Street to the Natora Group for $226 million.
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GFI Capital’s challenges in the Israeli bond market are affecting the Beekman Hotel, as a bondholder linked to GFI is urging others to vote on a proposal that may lead to the hotel’s sale to repay over $60 million in debt. This proposal follows GFI's notification to its Israeli bondholders of potential repayment difficulties and a request for a three-year extension to refinance the Hotel Seville and partially pay down principal. An unnamed bondholder owning over five percent of GFI’s bonds has suggested a restructuring plan deferring debt for two years, offering a $15 million upfront payment, with a 13.5 percent interest rate during deferment.
GFI would need to hire an advisor to facilitate the sale of both the Beekman and Seville, with voting scheduled for September 15. The Beekman, valued at $310 million, has consistently generated profits, achieving 81.71 percent occupancy and net operating income of $7.9 million through July. Conversely, the Seville's occupancy dipped to 61.14 percent with a mere $290,650 income in the same period. GFI aims to extend its $136 million senior loan and cites declining international tourism as a contributing factor to the Seville’s struggles. Many U.S. developers are reportedly facing difficulties in the Israeli bond market.
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The Capital Group, the world's largest active global investment manager, is set to open a new office at 345 Park Ave. in Manhattan, occupying the entire 70,400 s/f fourth floor under a 10-year lease beginning in the fall of 2027. This move will complement their existing office at 399 Park Ave. Michael Rudin, co-CEO at Rudin, emphasized the prime location and large floor plates of 345 Park Ave., along with upcoming amenity upgrades as key factors for accommodating Capital Group's growth in the Plaza District.
Rudin is enhancing the property with 45,000 s/f of new amenities, including a tenant-exclusive lounge and a luxury fitness center expected to open in early 2027. Notably, acclaimed chef Cyril Lignac will launch a Bar des Pres restaurant and two additional food concepts on the street level, with openings scheduled for next year. The 1,900,000 s/f tower has been home to prestigious firms since its development in 1969.
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Marx Realty will invest $68 million to reposition 430 Park Ave., transforming the 300,000 s/f, 19-story office tower into a classic Park Ave. office destination. The renovation includes a redesigned lobby and 12,000 s/f of amenity spaces, featuring the only loggia in a Park Ave. office for an elevated indoor-outdoor experience. CEO Craig Deitelzweig emphasizes incorporating hospitality-focused design while capturing the sophistication of Park Ave. The comprehensive renovation aims to create inspirational, collaborative spaces reflecting the neighborhood's aesthetic. Key amenities include “The Parlour,” a cozy, upscale lounge with a fireplace and boardroom, and a “Links Lounge” with a golf simulator.
A “Red Eye Suite” will offer refreshing shower facilities. The design will evoke a private members-only club ambiance, featuring warm lighting, marble flooring, and artful fixtures. The loggia, visible from Park Ave., is designed for gatherings with greenery and lounge seating, evoking a refined terrace atmosphere. Deitelzweig notes the intention to replicate the success of projects like 10 Grand Central and 545 Madison at this location, with an upcoming 150K s/f block of space. Studios Architecture and Marx Realty’s design team collaborate on the project, with ownership shared with Midwood Investment & Management and Oestreicher Properties.
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An Upper East Side mixed-use building at 1276 Lexington Ave. has been sold for approximately $12.6 million. The deal was executed by a joint venture that includes Midtown-based Prosper Property Group, using the entity Zuc Lexington Owner LLC. They secured $9.8 million in financing from Edgewood Capital Advisors. The seller, the limited liability company 1276 Lex Owner, is linked to the Riese Organization, a prominent restaurant operator in the city. Dennis Riese signed as the seller's representative.
The property features popular retail tenants, including 7th Street Burger, Krispy Kreme, and Lexington Marketplace, as well as 15 upper-floor apartments, which are currently not available. Prosper Property Group, founded in 2014, primarily focuses on developing residential buildings and has recent plans to replace a commercial building in Tribeca with a luxury condominium. Other properties held by Prosper include 75 W. Broadway and 63 Pitt St. Attempts to contact Riese and an attorney for Prosper were unsuccessful by press time.
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Co-op owners at Carnegie House averted a significant rent increase after a New York appellate court overturned a previous arbitration ruling that would have raised the ground rent from approximately $4 million to $24 million. This outcome is viewed as a victory for shareholders who had been contesting their landlord, linked to Cammeby’s International Group, over what they deemed an unaffordable rent hike that could lead to defaults and foreclosures.
The arbitration had sided with the landlords, valuing the land at over $300 million, but shareholders argued the process was biased, particularly citing an incident where the arbitrator was offered a paid position in another arbitration. In a decision earlier this week, the court acknowledged the compromised integrity of the arbitration process. Co-op board president Richard Hirsch expressed optimism that the ruling would allow for fair negotiations moving forward. However, a spokesperson for the landlords indicated confidence that future arbitration would still favor their side, suggesting the negotiations are reset to the start.
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Independence Realty Trust and Centerspace have agreed to merge, forming an $8.1 billion middle-market apartment real-estate investment trust. This merger combines Independence Realty's multifamily holdings in the Sunbelt with Centerspace’s properties in the Midwest and Mountain West. Chief Executive Scott Schaeffer noted that the merger aims to enhance operational efficiency and expand renovation and income initiatives across a larger platform.
Shareholders of Centerspace will receive 3.8 shares of Independence Realty Trust for each share they own. Post-merger, Independence Realty Trust shareholders will own approximately 78% of the new company, while Centerspace shareholders will hold about 22%. The merged entity is projected to have a pro forma equity market capitalization of $5 billion and will continue under the Independence Realty Trust name and ticker. The transaction is expected to close by the end of the fourth quarter of 2026.
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