Handing Back the Keys

Owner and developer RXR’s decision to hand back two New York City office buildings to lenders because the buildings’ future is so iffy is sure to send ripples of discontent through an office market already reeling from hybrid work schedules. Scott Rechler, RXR’s chairman and CEO, talks about the rationale behind the move. Also, office might be uneven but industrial keeps humming along like that annoying coworker in the next cubicle Case in point is a major Brookfield buy in Southern California.

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— Tom Acitelli, Co-Deputy Editor

Residential Conversion or Bust for Two Office Buildings: RXR's Scott Rechler

Scott Rechler could be handing over the keys to at least some of his kingdom to the bank. That is, if they can’t work out a deal with lenders to help the firm convert two of its New York City office buildings to mixed-use residential, Rechler told Commercial Observer. If Rechler’s RXR cannot reach a suitable agreement to redevelop the undisclosed buildings, it plans to relinquish control to the institutions that lent RXR the money in an effort to free itself from debt as the leasing market continues to stagger out of the pandemic. “We need [the banks] to cooperate to enable us to do that in a way that makes sense,” Rechler said. “Some buildings aren’t going to come back to be competitive as office buildings, so you need to think of what the alternative is. Those two are in that camp.”

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Brookfield Drops $329M on Fully Leased Southern California Distribution Center

In the face of rising interest rates, one of the most prominent landlords in Southern California has placed another big bet on the rampant warehousing and e-commerce industry. Brookfield has acquired a recently completed distribution center with 1.8 million square feet in the Inland Empire for $328.7 million, or about $183 per square foot. Fast fashion company Shein leases the two-building property in the city of Cherry Valley in Riverside County.

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