The 120-room hotel was completed in 2023, according to property records. The sale price amounts to just under $192,000 per room.

An affiliate of Hollywood-based AD1 Global sold the property to an entity managed by George Nediyakalayil, the CEO of Northbrook, Ill.-based Gas Depot Oil Company, according to state corporate records.

Last year, Nediyakalayil paid $29 million for a hotel near Miami International Airport.

In the Tamarac sale, NWL 2016 Evergreen of Miami Beach provided a $19.85 million mortgage to the buyer, according to public records.

The mortgage and the deed became public Thursday.

Jeff Ostrowski can be reached at jostrowski@commercialobserver.com.

Morgan Stanley declined to comment. Newmark (NMRK)’s Adam Spies, Marcella Fasulo, Adam Doneger,  Avery Silverstein, Josh King and Doug Harmon are brokering the sale. Newmark declined to comment.

“500 Park Avenue is an extraordinary addition to our Park Avenue Corridor portfolio and a rare opportunity to own an iconic asset that hasn’t traded in more than 40 years,” Harrison Sitomer, chief investment officer of SL Green, said in a statement. “Park Avenue is the best-performing office market in New York City with historic low vacancy, and 500 Park Avenue will continue to benefit from opportunities in this fortress corridor that attracts top-tier tenants and triple-digit rents.”

The deal works out to about $650 per square foot, which a source said is a number not seen in Midtown for a long time. The source added that SL Green had to beat out bids from foreign investors in Germany, Kuwait and Japan.

SL Green tapped Newmark’s Jordan Roeschlaub and Nick Scribani to secure $90 million in acquisition financing for the purchase, which works out to 65 percent loan-to-cost, sources said. A lender has not been selected yet. Newmark declined to comment. 

The office portion of the building between East 58th and East 59th streets covers 11 stories of the 40-story property, with the upper floors having 56 residential condos, according to The Real Deal.

Morgan Stanley put the office condo up for sale in September hoping to get $125 million as the investment bank tries to move away from the office market, TRD reported.

As of September, the building was 90 percent leased with tenants including Vera Wang, Georgetown Company and Friedland Properties, according to TRD.

The 500 Park deal comes amid a busy month for SL Green. The REIT kicked off November closing on a recap of the $1.3 billion loan of 5 Times Square, which it owns with RXR and Apollo Global Management, that includes a future $200 million equity infusion, as Commercial Observer previously reported. 

It later secured a three-year extension on its $724.8 million mortgage at 1515 Broadway — where it’s seeking to build a casino — and sold an 11 percent stake in One Vanderbilt Avenue in a deal that set the value of the building at $4.7 billion.

The only question now is whether SL Green will be celebrating tonight by popping the Moët or cracking open a cool can of Pepsi. 

– With additional reporting by Cathy Cunningham.

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.

Newmark (NMRK)’s Nick Scribani and Daniel Fromm arranged the transaction with oversight from Jordan Roeschlaub. 

The portfolio in the refi includes 383 units for apartment buildings at 80-08 135th Street and 81-10 135th Street Street in Briarwood. Black Spruce acquired the buildings from Musso Group for $87 million in January 2022, The Real Deal reported at the time.

Black Spruce’s properties involved in the loan also include Brooklyn affordable housing units at 

872 Bergen Street, 818 Bergen Street, 808 Bergen Street, 667 Classon Avenue, 663 Classon Avenue, 649-651 Classon Avenue, 643 Franklin Avenue, 634 Classon Avenue, 592 Franklin Avenue, 515 St. Marks Avenue, 489 St. Marks Avenue, 483 St. Marks Avenue and 1063 Pacific Street. 

The developer has had an active fall going into contract in October with retired boxer Floyd Mayweather Jr. to buy a 60-building 1,000-unit affordable housing portfolio in Upper Manhattan. Mayweather has made other investments across Black Spruce’s New York City multifamily portfolio, but it was not immediately clear if the buildings in the loan were included.

Officials for Black Spruce Management and Newmark did not immediately return requests for comment. Goldman Sachs declined to comment. 

Andrew Coen can be reached at acoen@commercialobserver.com

Dickies moved to 500 Taylor Street just last year after signing an 84,000-square-foot lease, and said at the time that it was planning a $2.5 million renovation of the space. But plans have clearly changed since then, with the company’s move to the West Coast set for May of 2025. It wasn’t immediately clear how big its new headquarters space in Costa Mesa will be in terms of square footage, or if Dickies will keep the Fort Worth space. 

“This move allows VF to further consolidate its U.S. real estate portfolio as part of its stated business turnaround strategy,” a Dickies spokesperson told Commercial Observer via email. The spokesperson added that the company will maintain a “strong employment presence” in the Dallas-Fort Worth region.

Revenue for Dickies was down 11 percent this past quarter compared to the same period last year, according to VFC’s latest earnings report. Bracken Darrell, VFC’s president and CEO, told investors during the call that Dickies is currently undergoing a “stabilization period,” but that “getting it back to growth is a different story.”

Since 1922, Dickies has produced and sold a line of affordable sturdy jeans, overalls, shirts and jackets that are commonly seen on construction sites. Dickies also produces scrubs and other clothes for health care workers, as well as a line of children’s clothing.

Nick Trombola can be reached at ntrombola@commercialobserver.com.

It’s also unclear how many jobs will be affected as a result of the closures, which are planned to occur by mid-2025.

“Our four distribution centers on the West Coast serve a lower concentration of stores,” Shane O’Kelly, Advanced Auto Parts’ president and CEO, said in the company’s latest quarterly earnings call. “We believe that investing in other core areas of the business will help deliver stronger profitability.”

Before the market closed on Monday, the company’s stock was trading at around $43.30 per share, down 30 percent so far this year. The retailer posted a $6 million net loss on $2.1 billion of revenue this past quarter, though it’s still a marked improvement over the $62 million loss on $2.2 billion of revenue it reported during the third quarter last year. 

Advanced Auto Parts also closed this past quarter its $1.5 billion sale of its auto parts wholesale distributor, Worldpac, to investment firm Carlyle. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.

Among the tenants at Wynwood Walk are Puttery at 239 NW 28th Street and Velvet Taco at 2820 NW Second Avenue. Other occupants include Sea Saw/Shinso, Chama De Fogo, Midtown Boba and Collectors Club.

With the latest loan, Boston-based Acres Capital has financed more than $100 million in projects for Thor Equities in the past month.

Earlier this month, Thor announced the closing of a $68.5 million construction loan from Acres Capital for 377 Carlls Path in Deer Park, N.Y. That financing will support the development of a 310,500-square-foot Class A industrial facility.

Jeff Ostrowski can be reached at jostrowski@commercialobserver.com.

“In an active and competitive office market, 75 Rockefeller Plaza stands out with its prime location and flexible design options that allow for tenants to stay nimble in an ever-changing office environment,” RXR’s William Elder said in a statement. “As more employees return to the office and look for a more engaging work experience, 75 Rockefeller offers convenience in the Rockefeller Center ecosystem, as well as a unique private club experience at the top of the building.” 

Bruce Mosler and Anthony LoPresti from Cushman & Wakefield (CWK) negotiated on behalf of the tenant. RXR was represented in-house by Daniel Birney, Walter Rooney and Heidi Steinegger along with a C&W team of Mosler, LoPresti, Ethan Silverstein, Connor Daugstrup and Bianca Di Mauro.

The same team represented the landlord in all three deals. C&W did not immediately respond to a request for comment.

The other two deals include an upgrade for law firm Pallas, which is expanding from the 7,510 square feet it occupied in the building since 2022 to 14,116 square feet on the entire 27th floor in a nine-year lease, according to RXR. Asking rent was $102 per square foot. Pallas had representation from LoPresti and Daugstrup of C&W.

Also, NCH Capital, an investment firm that focuses on Eastern European agriculture, is relocating from 452 Fifth Avenue to 4,724 square feet on the 29th floor of 75 Rockefeller Plaza. Jeffrey Peck, Jacob Stern, Daniel Horowitz and Yoni Bettinger from Savills negotiated on behalf of NCH.

Savills did not immediately respond to a request for comment.

Mark Hallum can be reached at mhallum@commercialobserver.com.

The deal is for 15 to 20 years, sources familiar with the deal told Commercial Observer. The asking rent was unclear, but a report from Newmark found office rents in Midtown averaged $80.50 per square foot during the third quarter of 2024.

Cushman & Wakefield (CWK)’s Mark Weiss and Newmark (NMRK)’s Moshe Sukenik brokered the deal for the tenant, while RXR’s William Elder represented the landlord in-house. C&W declined comment, while spokespeople for Ropes & Gray, RXR and Newmark did not immediately respond to requests for comment.

Ropes & Gray will take over a large portion of space left behind by law firm Paul, Weiss, Rifkind, Wharton & Garrison, which is moving from its 550,000-square-foot office at the building to 765,000 square feet at Fisher Brothers’ 1345 Avenue of the Americas, as CO previously reported.

Other tenants of the building between West 51st and West 52nd streets include Swiss bank UBS, which renewed its roughly 900,000-square-foot space there in May 2016, and marketing agency Omnicom Group.

Isabelle Durso can be reached at idurso@commercialobserver.com.

The transaction  would help the developer pay off a $1.5 billion construction loan supplied by Blackstone Mortgage Trust (BXMT) in 2018 as well as additional mezzanine debt on the 2.8 million-square-foot property.

The Spiral is 94 percent leased. A CMBS loan for the office tower is expected to generate strong investor interest on the heels of Tishman’s $3.5 billion deal for the 7.2 million square foot Rockefeller Center closing oversubscribed from its initial pricing levels with a fixed interest rate of 6.23 percent from its 6.5 percent starting point. The Spiral is the largest loan in BXMT’s portfolio with a $1.3 billion balance as of Sept. 30.

“Assets like The Spiral are very well positioned in today’s market, drawing strong tenant and capital markets demand,” a BXMT spokesperson said in a statement. “Liquidity is returning broadly across real estate sectors, including in office, which for BXMT has yielded $1.7 billion in office repayments so far this year.”

In a sign of promise for the office market, BXMT has received $2.2 billion of repayments for office loans since early 2023. The Spiral repayment will add to this momentum and enable BXMT to reinvest in more office loans in the near term with more favorable lending conditions, according to a market source.

The Spiral added private equity firm TPG as a tenant with a 301,276-square-foot lease in late October. The building at 66 Hudson Boulevard East is home to the global headquarters of pharmaceutical giant Pfizer with AllianceBernstein, HSBC and Turner Construction also anchor tenants.

The market source told Commercial Observer that the upcoming CMBS loan for The Spiral, the successful Rockefeller Center transaction and Japanese developer Mori Building Company is evidence of “strong demand for high-quality office assets.”

Tishman Speyer and J.P. Morgan declined to comment. 

Andrew Coen can be reached at acoen@commercialobserver.com 

The sale is the fourth completed via CRC’s Core Multifamily Fund, which it sponsors with fellow Baltimore firm Brown Advisory. The fund, which closed in 2022 after raising $146 million, has acquired three other buildings across North and South Carolina. 

“We had our sights set on the Howard County area for an extended period, and given that our corporate headquarters is located 30 minutes from the site, we can immediately scale our asset and property management operations to the benefit of our entire 16-site statewide portfolio,” Ari Abramson, CRC’s vice president of acquisitions, said in a statement. 

Despite the general malaise in the District’s commercial real estate market, there have been some residential deals topping well over nine figures in recent months. 

In D.C. itself, Japan-based Sekisui House REIT earlier this month spent $279 million on a 350-unit, four-property chunk of the City Ridge mixed-use community, which used to be Fannie Mae’s headquarters. In Virginia, meanwhile, Abacus Capital Group paid $207 million in late September for the 631-unit Residences at Springfield Station in Springfield. 

Maryland has seen some solid deals this year too, such as Olive Tree Management’s $73.5 million purchase of two properties in Columbia totaling 344 units from Mill Creek Residential in July. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.

The firm will be taking over the entirety of Seagram’s eighth floor with the new deal and also renewed the 52,124 square feet it occupies on the ninth and 10th floors. Asking rent was $225 per square foot. The New York Post first reported the deal. 

“Seagram is known as the premiere hub of financial and business services in Midtown,” RFR’s AJ Camhi, who represented the landlord in-house with Paul Milunec, said in a statement. “The competition for space is notably fierce as a large percentage of existing tenants want to grow in place at Seagram. We are always pleased to partner with our tenants to accommodate growth whenever possible.”

Churchill was represented in the lease negotiations by Scott Vinett of Savills and Chris Joyner of Fischer Corporate Real Estate. Neither Vinett nor Joyner responded to requests for comment. 

“As our firm and team continue to grow, we are excited to further expand our footprint at the Seagram Building,” Shai Vichness, chief financial officer at Churchill, said in the release. “The building’s central Midtown location and best-in-class service and amenities make it an ideal headquarters for our employees and clients.” 

Churchill first signed on at the Seagram Building with a 52,144-square-foot lease in 2022. The new deal comes on the heels of another lease expansion and extension for RFR’s Seagram Building. Alternative investment firm Blue Owl Capital grew to 238,673 square feet across the building’s 16th to 19th floors, as Commercial Observer previously reported. 

375 Park Avenue takes up the full stretch of Park Avenue between East 52nd and 53rd streets. Other tenants include investment company Freestone Grove Partners, Singapore-based investment firm Temasek International and financial services firm Strategic Value Partners. 

Amanda Schiavo can be reached at aschiavo@commercialobserver.com. 

Altogether, the Brazilian government will occupy 65,331 square feet on the 26th, 32nd, 33rd and 34th floors of the building, the landlord said. It’s unclear when Brazil’s government officials moved into the property.

Asking rent in the building was $70 per square foot, according to SL Green.

“With its historic architecture and proximity to Grand Central Terminal and the United Nations, the News Building is world famous as the home to Superman,” SL Green’s Steven Durels said in a statement.

Peter Trivelas and Justin Royce of Cushman & Wakefield (CWK) represented the Brazilian government in the deal while a C&W team of Harry Blair, Tara Stacom, Barry Zeller and Pierce Hance negotiated on behalf of SL Green. A spokesperson for C&W did not immediately respond to a request for comment.

The 37-story Art Deco tower was built between 1928 and 1930 by architects Raymond Hood and John Mead Howells. Other tenants include Visiting Nurse Services, Omnicom Group, United Nations Development Program and WPIX.

In 2021, SL Green sold off a 49 percent stake in the building to a real estate fund managed by Meritz Alternative Investment Management for $790 million, Commercial Observer reported at the time. SL Green still holds 51 percent ownership.

Since then, UN Women, a United Nations organization that serves women in developing countries, renewed its 85,522-square-foot space in March 2022.

Mark Hallum can be reached at mhallum@commercialobserver.com.

This conversation has been edited for length and clarity. 

Commercial Observer: I imagine a lot of capital coming into the multifamily sector because so many deals in 2021 and 2022 used floating-rate debt. What are we seeing happen to rightsize these capital stacks?

Chinmay Bhatt: There’s a lot of interest in mezzanine and preferred equity, and less interest in JV equity because capital wants to be in more of a protected position today. Often we’ll run a process and, even if we’re not asking for JV equity, we’ll get some JV equity options, but we also get folks who say, “We’re not a player in the common equity space, but would your client take any preferred equity or mezzanine loan options here?” Sometimes the client is open to this, and it all comes down to the structure and cost of that capital, but other times they’re looking for common equity executions. What we’ve seen over the past two years is that capital has been more cautious, and because of that cautious approach, they wanted to put out more preferred equity and mezzanine loans. There’s a lot of dollars chasing that type of execution, but there’s not enough deal flow. We heard recently from groups who told us they put out 30 or 40 offers for preferred equity, and they only closed one or two deals, because a lot of other people are offering that solution to owners and developers and you have to bid into that process. 

How has that impacted pricing? 

Bhatt: Risk is hard to price today, just with all the different uncertainties and the volatility going on in the market. So on any individual deal, in preferred equity or the mezzanine space, we’ll see a wide range of pricing: 200 to 300 basis points-wide options coming in from capital. It’s the same deal, the same leverage point, they’re just looking at it differently. Part of that is the source of capital [and its unique attributes]: do they have dedicated source preferred equity? Or a mezzanine bucket of capital? Or are they pulling out of their general fund that tends to have a higher hurdle for returns? So, it’s determined by where that capital is coming from and their view of the risk in the deal. Folks like us add a lot of value, because if we’re able to push down the cost of capital for a client by 2 or 3 percentage points per year, that will matter on a multiyear execution.  

How often are you connecting with equity sources? Who are they?

Noam Franklin: We spend all day talking to equity sources. They’re institutional family offices, private equity funds, life companies, endowment funds, sovereign wealth funds, pension funds, we’re speaking to the whole gamut of capital. The other benefit is we have a strategic alliance with Knight Frank that Berkadia announced a year ago. For Chinmay and myself, the benefit of this is we talk to the international capital every day now, usually early mornings. We get on a call with Knight Frank’s office in Berlin or Dubai, and they say, “We have a client in the market who wants to look at U.S. opportunities.” So we’re really getting a good overall feel of what global capital wants to do in the U.S.

Can you give me an example of the type of deals you’ve been working on? 

Franklin: We just capitalized a development deal in Grand Prairie, Texas, a Dallas suburb. We were told to go find preferred equity partners for the transactions, and we couldn’t believe what we were seeing. Some groups would price it [at a certain basis], and at the same leverage point, other groups were 300 basis points wide of where the business was won. It’s a bit of the Wild West in terms of capital throwing out terms. We ask most of these groups, “How much preferred equity or mezzanine debt have you deployed in the last 12 months with this strategy?” and, realistically, very few of them have done anything in that space. They tell us they put out terms sheets, but a lot of these deals die. 

Is all this new money going towards refinancings or other types of capitalizations?

Bhatt: It’s various types of deals. One type of deal is if someone is refinancing, and the new loan isn’t sufficient to pay off the old loan, there may be a gap that needs to be closed, or someone is recapitalizing their existing equity piece. So, for example, existing investors in the deal have owned it for a while, but are now looking for an exit. We can bring in a new capital source to continue the business plan. So the market is pretty active in the new development projects as well as in the acquisitions space. We’re actually seeing the acquisition space really heat up. Clients are bringing us deals where they’ll buy either through the market, or off-market, a property they don’t own yet, or on the development side, they need new investors to build multifamily across the country. 

There’s  a lot of overlap between mezzanine debt and preferred equity. How do they differ?

Bhatt: There can be a vast difference because it’s what you negotiate at the end of the day. Typically, mezzanine loans tend to be a higher level of involvement between the senior lender and the mezzanine provider because they need to have intercreditor agreement between each other, outlining how the senior lender and mezzanine lender will say to each other, “Hey, you’re the senior lender, and you recognize we’re the mezzanine lender, and here is what we can do under different scenarios when something goes wrong with this project, i.e. you give us this ability to right the ship,” and this entire legal process can be onerous, especially if it’s a lender which this mezzanine provider hasn’t done a deal with before.  

The other thing, in a mezzanine loan — and this isn’t always the case — is the rate of the cost is usually paid current. Meaning this: If it’s a development project, for example, there’s no cash flow in the early years, so you need to build in an interest reserve for a mezzanine lender to get paid their coupon. If it’s an existing asset, whatever cash flow comes off that asset must be able to pay the coupons for that mezzanine loan. 

For preferred equity, while there will be an understanding between the senior lender and preferred equity provider that, “Yes, we know each other, we’re in this capital stack together,” there’s not an onerous document like the intercreditor agreement governing that relationship. So that obviously saves time and dollars. But the other thing, with preferred equity, is we have greater ability to accrue the coupon versus paying it current, and we can do fully accrued deals, i.e., for development projects, when there is no cash flow, the investor can say “I can accrue this, until you start getting cash flow or sell the property,” or we can do something in between, where half of coupon is paid current and the other half is accrued [built up over time]. You usually have a little more flexibility on the structure of the payment with preferred equity versus mezzanine loans, but everything is a negotiation. 

Noam, you had hinted a moment ago about global capital entering the U.S. Where is this capital going?

Franklin: The two of us have been abroad six or seven times now since 2023, so we can speak to a lot of different regions. The one region of the world we meet with — where we view they really like the U.S. right now and and they want to take opportunistic risk — is Japan. Japanese investors have  been in the U.S. Historically, they understand the U.S. markets to some extent, and we found that they want joint venture equity risk, they want development risk, they want to be in partnerships with best-in-class developers in this country. They want to do development. That was the only region we traveled to outside of the U.S. where we thought they’re really bullish on new development. 

Until two years ago, the market here in the U.S. was so hot that most developers said, “If you have a site that pencils, and it makes sense, we can pick up the phone and have 10 JV equity partners and one will give us a term sheet, so why spend time talking to capital outside the U.S? There’s cultural differences to get around.” Now, there’s so little joint venture equity in the U.S. for development that Japanese capital is saying, “Hey, this is our time to get into programmatic relationships with the best developers across the country.” 

The other thing worth mentioning is the Middle East. What’s going on in the Middle East is all those markets, Saudi, Dubai, Abu Dhabi, they’re doing really well. Their view is “I can invest in my home markets on the development side or the value-add side for returns. It’s a market I know, and there aren’t any time zone issues.” Their view is that if we invest in the U.S. today, we need outsize returns to go there. But it’s hard to find outsize returns in the living actor. So they love the U.S., they continue to look at the U.S., but what they need is day-one, double-digit, cash-on-cash returns for multifamily assets. And we’re not finding many deals that do that. Until that happens, their view is we’ll keep looking, and maybe we’ll put out terms in preferred equity or mezzanine debt, but we haven’t seen them very active in the last 24 months here in the U.S. 

What’s  it like to broker capital between U.S. developers and sponsors and these faraway sources of capital on the other side of the world? 

Bhatt: One thing we’re really educating our clients on is the sophistication level of capital outside the U.S. It’s very high today. They’ve really come up the curve in terms of their understanding of the market, how to structure deals outside of the U.S., how to work with developers and operators here. Especially with larger family offices and institutions, you’ll find many have folks who’ve worked in London or New York or L.A., and have strong experience. I like to joke that sometimes we get term sheets from them and they look like term sheets we usually get from a major fund and only the logo has changed from Goldman [Sachs].  The folks now running real estate practice at these [foreign] firms have that experience base, that mindset, so they’ll apply the same process and due diligence [to deals]. 

And when they lock in, when our clients spend time to build that relationship, they see a lot of value. We call it a dating process: It’s a little lengthier when someone is sitting in Tokyo, Shanghai or Dubai. But once we get through that process it tends to be sticker capital, so that’s an important message we’ve been delivering here for a few years. The sophistication level is there. 

Let’s talk about interest rates. We’ve had a couple of cuts from Fed Chairman Jerome Powell. What’s going to be the impact of those cuts on the living sector?

Bhatt: You won’t see some direct impact, but what we’re hearing from capital providers, and capital markets in general, is uncertainty is usually one of worst things for investors — what you don’t know, you can’t plan for, you can’t underwrite it, and you can’t account for it. So what we’ve had in the last 18 months is a lot of uncertainty in the market. Politically, it’s election season, the rate environment went up and no one knew when it came down, and obviously geopolitics plays a factor. But what we’re hearing today is, slowly but surely, you’re getting some uncertainty under the table. The Fed has dropped rates for the first time in quite a while. What a lot of capital is telling is that we’re getting increasingly excited about the market. The senior decision-makers at these firms, whether they are family offices or funds, no matter where they’re based, say, “It’s harder and harder to remain pessimistic today.” And to be optimistic you first have to stop being pessimistic, so I think we’re at that important transition period right now. 

Which asset class in the residential  sector will benefit the most from debt and equity movements now that we have this clarification on interest rates?

Bhatt: More and more, we’re seeing that even capital that in the past might not have focused on multifamily, is focused on U.S. multifamily. Capital out of Asia doesn’t have the equivalent asset class, so they have to come up to curve on multifamily in the U.S. and the agencies here that provide financing. But we work with a lot of capital where we bring them up to speed on their knowledge base where they are now saying, “We’re very interested in multifamily in the U.S. and, yes, we understand it’s a large and deep pool of properties with institutional capital coming.”

Franklin: We’ve been talking every 30 minutes with large private equity funds, and what we’re finding is there’s a lot more optimism. Earlier in the year, if I’d met with a private equity fund and I asked, “What have you closed?” The answer was “Nothing.” In San Diego, last week was the first time we caught up with relationships where they actually had actual stuff, three joint venture value-add deals. And on the development side, a lot of capital tells us that no one is doing anything in that space, but we keep pushing back. Our team has closed five development deals since April. People are doing things, but we had to look at 1,000 deals to get those five across the finishing line. The point is development isn’t dead, it’s just much more difficult to get a JV partner on board today.

Brian Pascus can be reached at bpascus@commercialobserver.com 

And yet … is the project finally out of the woods?

Not to jinx anything, but we saw some encouraging signals coming out of North Jersey.

“The mall is finally finding its footing, where it appears to be starting to resonate with the broader trade area as a unique and interesting destination to visit,” said Thomas Dobrowski of Newmark. “It’s now on the radar throughout the New York and New Jersey area, and it’s becoming a true destination for the consumer, mainly driven by its unique features.”

The first and second quarters of 2024 saw a 30 percent year-over-year increase in revenue. And in 2023 the mall saw a 31 percent uptick in sales from 2022. That sounds like pretty decent progress. (To give you some idea of the figures we’re talking about, in 2023 the mall saw $553 million in revenue.)

As far as real estate stories go, the roller coaster that is American Dream is, in the words of Hoya Capital’s David Auerbach, a future case study for Harvard Business School and worth spending some time examining in our deep dive here. (Maybe there are pointers for other flailing malls.) And, hey, Black Friday is in five days. Now you know someone to give your money to whose name is not Jeff Bezos.

Things are looking up in a lot of Northern New Jersey, and not just at American Dream. Many developers figured out a long time ago that New Jersey is an answer to New York City’s housing shortage that actually pencils out.

Per a report from Berkadia, an estimated 17,975 housing units will hit the North Jersey market this year, whereas 20,979 units are slated to be released in New York City.

“We finished several big buildings, and we’ve been absorbing very well,” said Diego Hodara of Titanium Realty Group. “So the value is there for the renters, based on location, the quality and the type of product we are delivering to them, and in the price. So there is a good value for renters that are in need of housing because New York City has done a terrible job related to that.”

Even Jersey office has been showing decent signs.

Bank of America (BAC) signed one of the biggest office leases in Jersey City ever back in January when it took 547,962 square feet at Newport Tower at 525 Washington Boulevard — but others have signed on in a big way. J.P. Morgan Chase has 550,000 square feet at 545 Washington Boulevard, and Fidelity Investments recently signed a renewal for 185,000 square feet at 499 Washington Boulevard.

Over in Hoboken, Unilever recently signed a lease at 700 Sylvan Avenue, and Samsung took 321,207 square feet in Englewood Cliffs.

And the Bank of America deal could be the start of something more.

“This market has been notorious in terms of its ebbs and flows,” said Peter Bronsnick of Cushman & Wakefield. “When it starts to heat up, it typically takes one big deal for the story to unfold. So the market was stuck. We had considerable vacancy on the waterfront, somewhere in the 25 percent range, and we hadn’t seen any large transactions as we waited out what was happening post-COVID. The Bank of America deal set the market in the right direction, and now you’re starting to see other pieces fall into place.”

Big developers and owners like what they see.

“If you look at the overall New York area, there’s very little new construction coming,” said Hines’ Sarah Hawkins in this week’s Commercial Observer. Her firm recently acquired two apartment complexes, the Lenox and the Quinn, with a combined 408 units. “And we expect, over the long term, we’re going to continue to see robust rent growth [in New Jersey]. And the suburban New York City markets are areas that we want to own more residential. At the location that we bought, you can be in New York City within 10 minutes. So it is incredibly accessible to New York City, but at a fraction of the price.”

Green giant

On the New York side of the Hudson River, SL Green (SLG) had a pretty, pretty good week.

First up, they received a three-year, $742.8 million extension on 1515 Broadway, the 54-story office tower in Times Square that they’ve proposed to be the future New York outpost of Caesars Palace.

“This extension provides SL Green and our partners with the time and flexibility needed for our pursuit of Caesars Palace Times Square, bringing world-class entertainment to its most logical location in the heart of Times Square, the world’s greatest entertainment district,” said SL Green’s Brett Herschenfeld.

And the green giant’s most exciting project, One Vanderbilt, also got a huge boost: The Tokyo-based Mori Building Company purchased an 11 percent stake in the 73-story tower, which appraised the value of the building at … (wait for it) $4.7 billion!

If SL Green were in a casino, most pit bosses would throw them out if they suddenly had those kinds of winnings.

It’s not entirely shocking that values are bouncing back.

At CO’s ninth annual Fall Finance CRE Forum on Nov. 20, KKR’s Joel Kraut said that the roughly $20 billion in the U.S. pipeline today was a healthy sign.

“It’s going to be a multi-speed recovery,” said Traut. “We are certainly seeing signs of growth with lots of opportunity, but there’s more to go.” (If we needed any more proof of that last warning, we were as surprised as anybody that the famed Helmsley Building saw its value cut by 40 percent last week. Ouch.)

But the heavy hitters are scoring loans, like Witkoff and PPG, which just got a $273 million construction loan for a luxury condo and hotel in Hallandale Beach, Fla.

The heavy hitters are buying property, too, like Savanna, which just shelled out $255 million to buy 799 Broadway from Cannon Hill and Columbia Property Trust.

Players like Adam Neumann are back as well, buying a three-building office complex in Aventura for $116.2 million.

And industrial is still hot given that Longpoint Partners just ponied up $331.3 million for a 26-building, last-mile industrial portfolio from Blackstone.

All of which should whet one’s appetite for the inevitable Thanksgiving food coma we’re all gearing up for.

Happy holidays — see you next week!

On paper, the office statistics for the District are abysmal. Office vacancy hit 22.7 percent after the third quarter, continuing a trend beginning even before the pandemic hit the U.S., according to CBRE. Average monthly office occupancy is still below 50 percent of pre-pandemic levels, which has a direct impact on building values, according to an annual report by the D.C. Policy Center. Twenty-one office buildings over 50,000 square feet, sold throughout 2023 and the first half of 2024, traded for an average of 42 percent less than their 2023 assessed values, per the report. 

The sheer and overwhelming amount of financial distress backing D.C.’s commercial real estate market is also acute. While an exact number of underwater properties this year is unclear, the examples are legion: the foreclosures and/or auctions of the 580,000-square-foot property at 1800 M Street NW, the four-building portfolio at L’Enfant Plaza, and the 12-story high-rise at 1111 19th Street NW, to name a few. All of those were just in the past two months.

And this is not a problem entirely connected to the logy office market. Among the most notable, coincidentally, was the default earlier this year on $285 million of debt tied to the Waldorf Astoria Washington, D.C., formerly the Trump International Hotel, less than two years after CGI Merchant Group acquired it from the Trump Organization. Affiliates of lender BDT & MSD Partners acquired the 263-key hotel for $100 million at foreclosure auction in August. 

“It’s our perspective that things will probably get a little worse before they get better,” said Max Saia, head of investor research for real estate data firm VTS. “The increases we’ve seen in vacancy rates over the course of the post-COVID time period have started to slow, but it’s unlikely that’s over yet. We haven’t seen enough demand enter the market to make up the gap and drive vacancy downward yet.”

The interconnected causes of the District’s troubles are, like the city’s colorful history, complicated. High cost of living, poor return-to-office statistics, volatile crime rates, stadium woes, and, naturally, the downsizing of the city’s biggest tenant all play a factor. Details of how exactly Trump and his allies could help the city reverse course are, like other specific aspects of their agenda still six weeks until inauguration, murky. But Trump has proposed a number of policies that give a glimpse of where the business environment in D.C. could go. 

For over a decade, the General Services Administration, which manages the federal government’s nonmilitary real estate footprint, has systematically shed vast amounts of its owned and leased space. The agency said at the end of last year that it had disposed of nearly 12 million square feet of owned space and some 14 million square feet of leased space since 2013 — a trend reinforced by the Biden administration’s $425 million budget proposal earlier this year to continue the policy. The examples lately have been myriad: the State Department, Treasury Department, Department of Housing and Urban Development, and the Court Services and Offender Supervision Agency have all seen their footprints consolidated or shrunk throughout this year. 

Where Trump stands on that exact policy is currently unclear, but the former president has made general cuts to federal bureaucracy a central aspect of his agenda. As part of his plan to “clean out the deep state,” Trump plans to “reissue [the] 2020 executive order restoring the president’s authority to fire rogue bureaucrats” and “overhaul federal departments and agencies,” according to his website. 

Trump’s picks of Tesla and X owner Elon Musk and former presidential candidate Vivek Ramaswamy to lead the newly created Department of Government Efficiency (codenamed DOGE, in reference to Musk’s affinity for a certain cryptocurrency) are evidence of his intentions. Both Musk and Ramaswamy have been vocal advocates for cutting what they view as federal bloat, with the latter recently telling Fox News that he expects “certain agencies to be deleted outright.” A prime target on their list is likely the Department of Education, which Trump has previously pledged to abolish. 

Aside from outright cuts, Trump has made clear that he wants to move significant numbers of federal staff outside of Washington, D.C. — up to 100,000 positions, according to his website. Where or when those moves could take place is vague, but such a policy is not without precedent. Trump in 2019 announced the transition of the Federal Bureau of Land Management headquarters out of D.C. to Grand Junction, Colo. Yet the effects were relatively minor — the move affected about 328 positions, though only 41 workers actually relocated, according to the Department of the Interior. The agency’s headquarters was moved back to D.C. less than two years later. 

“We will take over the horribly run capital of our nation in Washington, D.C., and clean it up, renovate it, and rebuild our capital city,” Trump said at a campaign event in July. 

D.C. Mayor Muriel Bowser, for her part, has vowed to defend the District’s autonomy, publicly saying at an event in November that her administration had been planning for months “in case the District has to defend itself and its values” from a second Trump term. Bowser added at the time that her administration had attempted to communicate with Trump’s team, but that it had not yet heard back.

Bowser’s office did not respond to a request for comment. 

Meanwhile, both Musk and Ramaswamy are proponents of returning federal workers to office full time — which Bowser has also pushed for in the past — but only as a way to coerce those workers to quit. Nearly 161,000 federal jobs are in D.C., with another 140,000 in Virginia and 139,000 in Maryland, according to a September report from the Congressional Research Service. 

“Requiring federal employees to come to the office five days a week would result in a wave of voluntary terminations that we welcome: If federal employees don’t want to show up, American taxpayers shouldn’t pay them for the COVID-era privilege of staying home,” the pair recently wrote in an op-ed for the Wall Street Journal on Nov. 20, outlining their reform plan. Of the nearly 2.3 million civilian federal workers, 1.1 million are currently eligible for telework, while 228,000 work entirely remote, according to a lengthy report published by the Office of Management and Budget in August. 

“Bringing the workers back is good for the local economy overall,” VTS’s Saia said. “These things take a long time, but that will eventually increase spending at the local level — more people around, more people sharing ideas in close proximity to one another; eventually that will have positive spill over effects like new firm creation, new ideas, new companies, etc. All of those things are going to be positive very long term, but it’s going to take a while to play out.”

What these policies ultimately mean for the District’s business climate remains to be seen, but experts such as Saia think that things are likely to get worse for the District before they get better. In the long run, that isn’t necessarily a bad thing.

If D.C. is to regain its health as an urban center, analysts say that a diversification of its economy, and a shift away from being dominated by the federal government, is really the only way forward. If the federal government continues to shrink away from the District under the new Trump administration, then, that leaves room for other entities and industries to move in. 

D.C.’s interdependence with the federal government “was something that lifted the city for a very long time,” Sayin said. ”The city was recession-proof because the feds would hire if the private sector employment went down. But it really prevented us from diversifying our economy.  

“So it’s like we have this one big ginormous egg sitting in this one basket with a fraying bottom. And a transition away from that is difficult, but a healthy thing, and I think if done in collaboration with the federal government it’s going to benefit both entities.”

Nick Trombola can be reached at ntrombola@commercialobserver.com.