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Jane Street Group’s footprint at property nears 1M sf
Jane Street Capital is expanding its office space at Brookfield Place in Battery Park City to nearly 1 million square feet, according to Bloomberg. The expansion, which adds 400,000 square feet, is part of Jane Street's expansion of 600,000 square feet at the property. Jane Street has been at Brookfield Place for a decade and signed its first lease in 2014, taking 117,000 square feet after abandoning an office at One New York Plaza. The expansion required Brookfield's corporate offices to be relocated to accommodate Jane Street's growing space.
The lease terms were not disclosed, and Brookfield handled the deal in-house. The 34-story, 1.8 million-square-foot property is located between the Hudson River and the World Trade Center and is home to notable tenants like Scotiabank and College Board. This is Brookfield's second significant office lease in a week, following WeWork's recent deal with Amazon to add 112,000 square feet at 5 Manhattan West. Manhattan's office leasing market is showing signs of recovery, with tenants signing deals for 3.6 million square feet of office space in January, and leasing volume rising 24 percent from December.
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Manhattan's 590 Madison Avenue office skyscraper is set for sale, marking one of the first major tests of the trophy office building market this year. The property, which was once known as the IBM Building, is being priced at around $1.1 billion. Eastdil Secured brokers Roy March, Gary Phillips, and Will Silverman are marketing the tower. The State Teachers Retirement System of Ohio, which owns the building, has not commented on the pricing. The tower is one of New York's largest trophy assets to be actively marketed for sale since the pandemic. The property was once known as the IBM Building, but the company has since relocated to 1 Madison Ave. The average hold period of real estate on the eight corners on 57th Street and Madison Avenues and 57th and Fifth is over 40 years, indicating the rarity of this opportunity. Demand for high-quality buildings in Midtown Manhattan has strengthened in recent weeks.
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Tech giant recently debuted its $2B headquarters at St. John’s Terminal
Google is seeking to sublease 165,000 square feet at 345 Hudson Street, owned by Hines, Trinity Church Wall Street, and Norges Bank Investment Management. The company is taking a measured approach to ensure its real estate investments meet the current and future needs of its business. The 980,000-square-foot 345 Hudson Street has over 400,000 square feet available, with no asking rent provided.
Google signed its lease at 345 Hudson in 2018 as part of its push for an office campus in the neighborhood, which also extended to 315 Hudson Street and 550 Washington Street, also known as St. John's Terminal. In 2021, Google purchased the latter for $2.1 billion, marking a high watermark for Manhattan's post-pandemic office market. Google has office space across the city, including 300,000 square feet at Vornado Realty Trust and Related Companies' 85 Tenth Avenue and Pier 57 across the West Side Highway. Leasing volume surged 24 percent from December.
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Asset quality remains concern, but not as great as predicted
S&P Global has deemed the threat of commercial real estate loans to regional banks overblown, stating that the lenders, including M&T Bank, Valley National Bancorp, Columbia Banking System, First Commonwealth Financial, Synovus Financial, and Trustmark, have only gradually deteriorated in CRE asset quality. The agency also shifted its outlooks for all six banks to stable from negative, indicating a firm is on solid ground. The downturn was a threat to all lenders, but regional banks took center stage as they took on the lion's share of commercial real estate lending after bigger institutions pulled back after the Global Financial Crisis.
S&P believes that the Fed's 1 percentage point cut has been a help, as have growing deposit bases and signs that property values are stabilizing. The market has found its bottom, and lenders are more willing to refinance due to greater certainty around the downside risk. However, distress risk remains, with delinquencies, loan modification, and defaults likely to tick up. S&P expects banks to absorb associated losses through earnings while retaining profitability. The report authors also note that higher interest rates continue to cause trouble for sponsors at maturity.
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Extell Development has sold a retail condo on Billionaires Row for $25 million, according to property records. The condo, which is part of the luxury condo building The Briarcliffe, was purchased by Cindy K. Chan through CCW Family Realty. The space, which appears to house a Chase bank branch, was previously sold to music firm Forrell & Thomas in 2006 for $10.2 million. Extell bought the site back in July 2023 for around $11.4 million. The sale coincided with Extell's recent purchase of an office building at 15 W. 46th St. for $24.8 million, which the previous owners had filed plans to demolish. Chan could not be reached for comment, and the law firm used for the purchase, Yeung and Wang, did not respond to a request for comment.
This is Chan's second purchase from Extell, as she bought a luxury condo at the developer's nearby Billionaires Row project Central Park Tower in 2021. The Briarcliffe dates back to 1922 and was converted to condos about 25 years ago, according to StreetEasy. It stands 13 stories tall with 35 units, one of which is currently available: a four-bedroom asking $6.7 million, the site says. Extell is one of the city's busiest and highest-profile developers. It recently filed plans to bring a pair of residential buildings to the former Disney/ABC campus on the Upper West Side, and it has plans for towers that will stand more than 30 stories tall at 655 Madison Ave. and 574 Fifth Ave. The property the firm purchased at 15 W. 46th St. was built in 1920 and stands 10 stories and 115 feet tall.
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Billionaire restauranteur’s next stop on deal spree would buy out club’s original investors
Zero Bond, a Noho nightclub with notable figures like Mayor Eric Adams, is in talks with Texas-based billionaire Tilman Fertitta to acquire the members-only club. Fertitta is reportedly considering buying out the original investors of the club, but has not yet confirmed the deal. Under the potential deal, Scott Sartiano and Will Makris would retain their equity in the club and continue its operations. They are already working on a second Zero Bond location at Wynn Resorts in Las Vegas, and Fertitta would also back Sartiano's restaurant at the Mercer Hotel in Soho.
Fertitta is a partner in Catch Hospitality Group, but is acting independently in his pursuit of Zero Bond. He also acted independently in the fall when he paid $30 million to acquire the Keens Steakhouse brand and its Midtown Manhattan location. Catch's recent moves in New York City include deals for former seafood restaurant Principe, the Corner Store in Soho, and a lease for the Frog Club. Fertitta is the CEO of Landry's, a Houston-based hospitality brand known for Morton's The Steakhouse, The Palm, Rainforest Cafe, and Dos Caminos.
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DOGE claims taxpayers are saving $79M from the cuts
The US government is facing a significant real estate crisis, with hundreds of leases either canceled or restructured. Elon Musk's Department of Government Efficiency has claimed to have canceled or restructured 98 leases across the country, resulting in taxpayers saving $78.9 million. Washington, D.C. is the most affected area, accounting for 63% of the square footage impacted and 69% of the expected savings. The majority of the General Services Administration's real estate holdings are office properties. The largest lease terminated by DOGE is an 845,000-square-foot deal in Washington, D.C., which appears to match office space for the Department of Labor's Bureau of Labor Statistics.
As of last month, the federal government had over 174 million square feet under lease, paying nearly $5.8 billion annually on rent for those properties. The GSA has 18.4 million square feet of leases due to expire this year and another 54 million square feet under lease with termination rights. Trump and Musk's plan to downsize the government's real estate has led to a 50% slash of the GSA budget and the idea of selling two-thirds of the government's office stock to the private sector.
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Deal would give Pershing 48 percent of company known for master-planned community developments and make Ackman CEO and chairman
Pershing Square Capital Management has proposed a $900 million deal to increase its stake in Howard Hughes Holdings from 37.6 to 48 percent. The non-binding offer involves acquiring 10 million newly issued shares at $90 per share, a 46% premium over the company's stock price in early August. Pershing Square would finance the investment using its own balance sheet cash. Under the terms of the offer, Ackman would become the CEO and Chairman of Howard Hughes, known for its master-planned community developments. Ackman's vision for the company is to reshape it into a diversified holding company, similar to Berkshire Hathaway, Warren Buffett's investment vehicle.
The goal is to acquire controlling interests in both private and public companies that meet Pershing Square's investment criteria. Pershing Square withdrew its bid from Jan. 13, which sought to purchase 11.8 million shares at $85 each in an attempt to take majority control. Howard Hughes is now led by Scot Sellers and CEO David O'Reilly, who previously served as chairman and CEO at Archstone. Ackman has also been involved in other real estate ventures, including listing his Central Park West duplex for $19.9 million in November.
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Fight over whether remote-work protections for federal workers last from one administration to the next
The Trump administration's plan to force federal employees back to the office is not only aimed at ending remote work but also erodes the powers of organized labor to protect government workers from unwanted changes. Under one of his first executive orders, President Trump directed federal workers to return to the office. Labor unions are fighting the directive, arguing it violates collective bargaining agreements that guarantee the right of many employees to work remotely. The clash will test a conservative legal theory that collective bargaining agreements aren't binding from one administration to the next.
The administration aims to dismantle the merit system and return the government to the spoils system, awarding the president who gets into office and punishing people who worked for a prior administration. The White House has pointed to guidance directing agencies how to handle certain collective bargaining issues. Among the workers who have received explicit instructions to return to the office in coming weeks are employees of HHS, the Environmental Protection Agency, and the Education Department.
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At 84, real-estate tycoon Stephen Ross is spending a fortune on his vision to transform the area into a rival to New York and San Francisco
West Palm Beach, Florida, is set to spend nearly $10 billion on transforming the once-gritty South Florida city into a business and financial center. Ross's new real-estate firm, Related Ross, is expected to add over 6 million square feet of office space, 1.4 million square feet of condos, 700,000 square feet of retail and restaurant space, and 870 hotel rooms across 70 acres of land. Ross aims to attract venture-capital and tech firms to West Palm, taking on Silicon Valley, Wall Street, and Miami. He believes venture-capital and tech firms in California have tired of the state's high taxes, regulation, and business climate that's less friendly than Florida's. Ross also senses an opening from what he calls "Miami fatigue," the sensation that the fast-growing metropolis to the south has become too urban, too congested, and too expensive. He is talking to the city about developing more affordable and workforce housing.
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Ivy club lost the property to foreclosure in late 2023
Princeton University's former home of the Princeton Club, which was taken in foreclosure, is now up for sale by a mystery lender. The 10-story, 64,000-square-foot building, which was constructed in 1962 and renovated in 2008, is being offered for various uses, including office, hotel, residential rentals, condos, student housing, or a United Nations headquarters. The building has 52 guest rooms, two restaurants, a squash and fitness center, a library and business center, and 16,000 square feet of meeting and events space.
The Princeton Club faced financial struggles for several years, with $49.4 million in liabilities and $30.3 million in assets by the end of 2019. The club defaulted on a $39 million mortgage from Sterling National Bank in October 2021, which was sold to the current owner, who foreclosed on the property in December 2023. The current owner is operating through an attorney at Kleinberg Kaplan, Kelly Zelezen, who could not be reached for comment. A representative from New Jersey-based Peapack-Gladstone Bank had been servicing the loan during the foreclosure process.
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The Empire State Building is set to implement dynamic pricing, a practice that increases ticket prices as demand increases. CEO Tony Malkin, who owns the building, said that dynamic ticket pricing will help the company maintain financial strength. The observatory at the building's 86th and 102nd floors currently starts at $79 for adults, $77 for seniors, and $73 for children. Prices increase based on the time of day, but not based on how many people are trying to buy them.
Dynamic pricing has faced resistance among music fans, as multiple people trying to buy the same concert can cause prices to skyrocket above their initial listed prices. The observatory's net operating income for Q4 2024 was $28.5 million, up 6% year over year. The company expects it to be between $97 million and $102 million this year. However, Malkin stressed the uncertainty around tourism, citing a decrease in direct flights from China to the city and potential global politics making the U.S. less attractive for European tourists. The firm's Manhattan office space portfolio ended Q4 at 94.2% leased, with retail space at 94.1% and multifamily at 98.5%.
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