?? Cohen to hand office keys to lender; City announces 421a replacement … and more
THE RUNDOWN:
?? Charles Cohen’s list of troubled office properties just got one more property. Cohen is looking to hand Tower 57 on Billionaires’ Row to his lender, shortly after defaulting on the ground lease.?
?? As hopes for a statewide 421a replacement fade, the city is looking to create its own version of the subsidy. But, the policy comes with a few caveats.?
?? It’s been a rough year for office leasing throughout much of the country, as many metro areas saw availability increase as sublet space hit the market. But there were some major leases. Check out the biggest office leases in South Florida and Austin, Texas.?
?? Multifamily sales dominated Chicago’s priciest commercial deals for the year. Meanwhile, luxury residential was far off from the previous year’s records. But there were still some eye-opening sales, headlined by Citadel’s Ken Griffin.?
?? There seems to be no end to Nate Paul’s legal troubles. The latest are purely self-inflicted, as Paul failed to show to his court date over $1.4 million in legal fees he may owe.
?? San Francisco typified much of the distress dominating commercial real estate in 2023. Case in point: the top stories for the year include defaults, huge discounts, and the collapse of Silicon Valley Bank and First Republic.
THE DETAILS:
Charles Cohen is looking to give Tower 57 back to a lender after falling behind on rent at the office building. Cohen is no stranger to office distress. His total delinquencies on New York office properties is over $600 million. But this one is different. Cohen found himself in trouble at Tower 57, his Midtown Manhattan office building, thanks to high vacancy at the property. So, he asked his landlord for permission to convert it to residential. But the landlord refused. So, Cohen stopped paying rent to the owner of the land beneath the building. Now, he owes $9 million to that landlord, and he’s looking to get rid of the tower.
With 421a gone and little hope for a statewide replacement, the Adams administration has devised its own city-funded alternative to the expired state tax break for rental projects. The policy is far from a one-for-one replacement, though. The subsidy will be granted on a case-by-case basis, as opposed to the as-of-right nature of 421a. And that’s not the only constraint to the policy. Developers, who have all but abandoned rental projects since 421a’s expiration, are expected to give city officials an earful when they solicit feedback on the policy in January.
领英推荐
In South Florida, the office leasing boom of late 2020 to last year slowed down in 2023. The year's biggest leases were marked by a majority of renewals, some expansions, and two new signings. The story is similar to that in the rest of the country: economic headwinds, including rising interest rates and remote work, contributed to the shift away from the office, and sublease space skyrocketed.?
Meanwhile, Austin's office real estate landscape in 2023 saw record-high sublease availability and vacancy rates. There were notable deals, like IBM's lease at an upcoming Domain office owned by Hines. The Domain and downtown Austin were among the few bright spots in the city, as the two neighborhoods were home to a few of the largest leases of the year.?
Plus, check out TRD’s other year-end lists, like New York’s biggest commercial real estate loans, Dallas’ priciest residential listings, and San Francisco’s most expensive home sales of 2023.
Chicago’s office market was a drag on commercial sales this year. But the city still saw a few bright spots, like West Loop multifamily properties, and some big-time investors wanted in on the action this year. The biggest commercial purchase came courtesy of Zara’s billionaire founder, who splashed $232 million on one of Chicago’s most iconic residential buildings.?
Speaking of residential, the city’s luxury market saw a sharp downturn from the previous year, when Chicago had record-setting sales around $20 million. The top sales were considerably less this year, as was the total volume of deals over the $4 million threshold. The village of Winnetka saw several headline sales, though. And Ken Griffin made a splash when he offloaded his Chicago real estate as he finalized a move to Miami.
Nate Paul was set to appear in a Travis County court on December 21 for a hearing on whether he’ll be forced to pay $1.4 million in fees for the lawyers who defeated him in a foreclosure lawsuit. But Paul, the CEO of World Class Holdings, never showed. The dispute began with a tumultuous foreclosure auction in June 2021. Paul’s World Class Holdings defaulted on a loan associated with a former 3M office campus in 2019, and Karlin Real Estate purchased the debt. Now, the court must determine whether World Class Holdings is obligated to pay legal fees to Karlin Real Estate and its partner.?
The Bay Area prides itself on being ahead of the curve. In 2023, that wasn’t a good thing. The region became the epicenter of a national banking crisis that sent ripples across the real estate industry. It’s also home to some of the biggest defaults and discounts on commercial properties in the country. Check out TRD’s list of the buzziest real estate stories out of the Bay Area this year.?
THE CLOSE:?
Which stories will dominate the industry in 2024? Keep reading TheRealDeal.com to find out.