Since the pandemic there has been a shift in commercial property markets abroad and in the US. Covid showed that companies could get away with telecommuting for some employees. While this saves costs for the company it adversely affects those in the inner city as the office spaces are left vacant the restuarants and coffee shops once frequented are left with “less” daily customers creating what some deem as the cascading effect.
Zero Hedge reports:
The world’s largest owner of commercial real estate, Blackstone has turned over the keys of 1740 Broadway, a 26-story office tower a block from Carnegie Hall, to the special servicer on its $308M commercial mortgage-backed security, Commercial observer reports.
Deutsche Bank originated the loan in 2015 as part of a single-asset, single-borrower CMBS deal and enlisted special servicer Green Loan Services to manage the financing deal. Blackstone has extensive Manhattan holdings, and the decision to hand the keys to Green Loan Service is “a one-off occurrence,” a source close to the deal told CO.
Blackstone bought the 621K SF tower from Vornado Realty Trust in 2014 for $605M. It has lost two major tenants in recent years, with law firm Davis + Gilbert leaving for Rudin’s 1675 Broadway in 2019 and L Brands electing not to renew its 418K SF lease, instead moving to 55 Water St. in 2020.
“This asset faces a unique set of challenges, and we are working diligently to find a solution that is in the best interests of all parties involved, including our investors and lender,” a Blackstone spokesperson said of the building.
“The vast majority of our office portfolio comprises differentiated office properties, such as life science office and office properties benefitting from content creation tailwinds, and we are confident those properties will continue to outperform. We continue to be big believers in New York and cities like it that are hubs for innovation and talent.”
Blackstone’s decision to cut its losses at 1740 Broadway echoes recent moves in Chicago, another office market suffering from macroeconomic shifts. Last week, two towers each spanning over 1M SF were on track to find themselves in the hands of lenders, according to CMBS tracking firm Trepp.
With large dips in employment as people leave the job market, rising costs, and closing businesses. We could see the very companies or people who own the buildings in a place of dire straits as the commercial market continues to spiral.
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