Manhattan office landlords will owe lenders $12.7B in the coming months

BY NATALIE SACHMECHI

The owners of Manhattan office buildings are facing $12.7 billion in commercial mortgage-backed securities that will become due in full this year or next, according to data from Trepp.

Several of the loans are due in 2023 because they received a one-year extension from their lenders during the pandemic, but it’s not likely that they’ll be given the same treatment again. With higher interest rates, slow leasing activity and struggling occupancy rates, the upcoming loan maturities are ones to watch.

These 10 addresses hold the largest commercial mortgage-backed securities loans in the New York City office market that are set to mature in 2023 or 2024. Together, they comprise nearly $7 billion in debt, or 56% of all the CMBS debt owed by city office buildings, that must be repaid in less than two years.

280 Park Ave.: $1.1 billion

This 1.3 million-square-foot office property in Midtown East is owned jointly by SL Green and Vornado Realty Trust. The $1.1 bil- lion loan on the property is due in full by Sept. 15, according to Trepp. The partners closed on the loan in 2017 to refinance a $900 million loan from Deutsche Bank that was scheduled to mature this May.

1290 Sixth Ave.: $950 million

Also owned by Vornado, this building measures 2.1 million square feet and sits by Rockefeller Center. In November 2021 Vornado closed the $950 million loan, which matures in November to replace another loan of the same size that was scheduled to mature in November 2022. Paris-based liquor company Remy Cointreau recently announced it would be relocating its 52,000-square-foot headquarters at the building to 30,000 square feet at Rudin’s 3 Times Square later this year.

1 New York Plaza: $835 million

This 2.6 million-square-foot Financial District building is owned by Brookfield Properties, China Investment Corp. and AEW Capital Management. The owners put the property on the market in early 2022 but pulled their listing months later. The owners refinanced the property late in 2020 with an $835 million loan originated by Wells Fargo, Goldman Sachs and BMO Harris Bank that will mature in January. That replaced a $750 million loan obtained from Wells Fargo in 2016.

277 Park Ave.: $750 million

The Stahl Organization recently completed a $120 million revamp of its Midtown East office tower. Its $750 million mortgage will mature in August 2024. Trepp placed this building on its watch list last month—JP Morgan is the main tenant with over 40% of the space (down from 70% in 2021) and is opening a new office nearby that could reduce the need for this one later on.

230 Park Ave.: $670 million

This property, also known as the Helmsley Building, is owned by RXR Realty, which recently announced it would be giving some of its older, obsolete office properties back to the bank instead of continuing to make debt payments. The firm’s chief executive, Scott Rechler, didn’t specify which properties or how many, but this building was constructed in 1929. Its $670 million mortgage matures in December.

375 Park Ave.: $573.8 million

This iconic Manhattan office tower, also known as the Seagram Building, is owned by Aby Rosen’s RFR Realty. This year it also made it to Trepp’s watch list because of high tenant turnover and an occupancy rate that fell from 98% in 2018 to 95% most recently, Trepp reported. In December law firm Fried Frank announced it would be relocating from its offices there to 14,000 square feet at 535 Madison Ave. Its nearly $600 million mortgage will mature in May.

150 E. 42nd St.: $525 million

This office building is owned by the 601W Cos. A major tenant there, Dentsu, is reportedly trying to get out of its 112,328-square-foot lease. The $525 million mortgage on the building is due in September 2024.

620 Eighth Ave.: $515 million

Also known as the New York Times Building, this 744,000-squarefoot Brookfield Properties office tower in July closed on its $515 million mortgage, which matures in December. It has seen strong leasing traction in recent months. Software maker Datadog and jobs site

Indeed together took 330,000 square feet at the building in July.

330 Madison Ave.: $500 million Vornado Realty Trust owned this building until 2019; it’s now owned by German real estate group Munich Re Group. The owner’s asset management arm, MEAG, recently consolidated its three New York offices into 75,000 square feet at the building. The $500 million mortgage on the property matures in August 2024.

300 Park Ave.: $485 million

This Tishman Speyer building serves as the headquarters of Colgate-Palmolive, which occupies 242,000 square feet there. However, occupancy at the building fell from 99% in 2018 to 75% in 2020 before rising to 81%, Trepp reported. The $485 million mortgage on the property matures in August. ■ because so many future voters had arrived here from the Jim Crow South. ese days census data shows that the descendants of the Great Migration are often heading back to states such as Georgia and Alabama, where a single-family home with a backyard can be had for a fraction of the cost of property in Brooklyn and Queens. e city’s Black population has declined by nearly 200,000 in two decades.

For the voters that remain, expectations for the rising political class are raised: Can a Black mayor, two Black speakers, a Black majority leader, Black borough presidents, prosecutors and party bosses deliver tangible quality-of-life improvements? Can they make New York safer and more a ordable for the Black residents who have handed them their votes?

“What I don’t get caught up in is identity politics,” Richards said. “We now have an obligation. We have to make substantial change in the community, and that pressure is on.

“How are we addressing many of the systemic issues that plague our community?” he continued. “Whether it’s housing, policing, health care, education—how are we investing in the infrastructure in the community that has been historically disinvested in?”

Scene has changed

David Paterson, the state’s rst and only Black governor, is considering the same questions as Richards, even as he takes satisfaction in how much the political scene has changed in his lifetime.

“We’ve proven that we can win and get into decision-making capacities,” he told Crain’s. “What is still, I think, germinating is the ability to change conditions in communities.”

For a political observer in 2020s New York, it would be easy to forget how challenging the 20th century and even the early 21st century were for the African American and Afro-Caribbean politicians, activists and voters who hoped to have a say in how the government operated.

In 1990, when David Dinkins became the city’s rst Black mayor, he was an outlier in the political rmament of the state. e governor and both leaders in the state Legislature were white. So were the district attorneys of the ve boroughs, the borough presidents and most of the Democratic Party bosses. In Harlem and central Brooklyn, Black political power was ascendant, but leaders from those neighborhoods only had so much in uence elsewhere.

Four years later a white, outerborough backlash would come for Dinkins, and Republican Rudy Giuliani would go on to lead the city for the rest of the decade.

Migrating from Harlem to Brooklyn and then to southeast Queens— and now to the Bronx, where Vanessa Gibson is that borough’s rst Black borough president—Black political power can be found all across the city today.

Comity among the power brokers is never guaranteed. Adams, a moderate mayor, has been at odds with the two state legislative leaders, Carl Heastie and Andrea Stewart-Cousins, over his push to weaken criminal-justice reforms passed under their watch. Je ries and Mayor Adams, if aligned these days, were long rivals in central Brooklyn. Speaker Adams, representing a largely liberal City Council body, has begun to push back on the mayor as well.

Unity, if not concrete action, did come when the Rev. Al Sharpton called a summit of Black political leaders last month at his National Action Network headquarters to discuss public safety. Mayor Adams, Speaker Adams, James, Stewart-Cousins and Antonio Delgado, the lieutenant governor, all attended. “ ey haven’t been in the room

BY THE NUMBERS

2010s

BLACK VOTERS in Brooklyn and Queens became a pivotal, highturnout voting bloc in the 2010s.

23.8% together to talk about crime,” Sharpton told Politico. “Why are we not talking collectively?”

CENSUS DATA show the Black proportion of city residents has dropped from 25.1% in 2010 to 23.8% today.

Center of power

For much of the past century, Black political power was con ned to Upper Manhattan, where Adam Clayton Powell Jr. became the rst Black member of Congress from New York. In this period another product of the Harlem Democratic establishment, Hulan Jack, was able to get elected Manhattan borough president, becoming the highest-ranking Caribbean American elected o cial at the time.

In Harlem, which functioned for many decades as the very center of Black political power in America, the Gang of Four—Charlie Rangel, Percy Sutton, Basil Paterson and Dinkins— represented the peak of the legendary neighborhood’s in uence. Rangel took Powell’s seat in Congress and served for the next four decades. Sutton became Manhattan borough president. Basil Paterson was secretary of state under Hugh Carey, the Irish American governor from Brooklyn.

All of these achievements were paired, to some extent, with setbacks. David Paterson, Basil Paterson’s son, remembers being a young law school student in 1977, hoping desperately that Sutton would at least nish in the top two in the Democratic primary for mayor. Sutton was a top contender that year but was beaten back by a number of white candidates, including Mario Cuomo and Ed Koch. “I remember just how disappointed we were. We thought we could get a candidate into the runo ,” Paterson said.

Four years later Dinkins, then an assemblyman, tried to get elected Manhattan borough president. He lost to Andrew Stein, a white scion of a publishing dynasty, and would nally claim the post in 1985, when Stein ran for City Council president.

at victory allowed Dinkins to compete, in 1989, to defeat Koch in the mayoral primary.

Younger Black politicians such as Richards speak of the vital importance of Barack Obama’s 2008 campaign. Obama proved, at last, that a Black politician could be elected president of a country with a long history of racial strife. For older Black politicians and activists, there is almost equal reverence for Jesse Jackson, who twice ran for president in the 1980s and attempted to assemble the multiracial coalition that Obama would later cement in the 21st century. Jackson could not ever get past Walter Mondale or Michael Dukakis in the Democratic primaries, but he organized the growing African American and Afro-Caribbean vote in New York City. Dinkins supporters credit Jackson’s campaigns with laying the groundwork for the historic 1989 bid.

“ ere are a lot of ways you can trace the growth of Black political power,” said Basil Smikle, a Demo- cratic strategist and former executive director of the statewide party.

Dinkins or Vann, or helped Major Owens get elected to Chisholm’s old House seat. Although the Black population of New York was no longer growing, Black voters in central Brooklyn and Queens had become a pivotal, high-turnout segment of the Democratic electorate. To win o ce, especially boroughwide and citywide, politicians had no way of circumventing them.

James, the attorney general, is another protégé of Vann. She rose from the City Council to the public advocate’s o ce in 2013, replacing Bill de Blasio, who ran and won an underdog campaign for mayor. Although de Blasio was white, he had a biracial family and campaigned aggressively on police reform, appealing to many Black voters in Brooklyn and Queens.

“Jesse talking about his Rainbow Coalition opened the door for Dinkins to talk about the ‘gorgeous mosaic’ of the city.”

Political in uence

Brooklyn, the second center of Black political in uence in New York—and its ultimate heart today—came along later than Harlem. e civil rights movement gave way to redistricting that nally ended the blatant gerrymandering of Black voters in Bedford-Stuyvesant.

Shirley Chisholm, a charismatic and unapologetic liberal, won the new district and, in 1969, became the rst Black woman to enter Congress. In 1972 Chisholm ran a trailblazing campaign for president, and soon other Black Democrats were following her lead in Brooklyn. Al Vann, a Brooklyn assemblyman, methodically challenged the white-dominated Democratic machine of Brooklyn, winning elections and mentoring a new generation of leaders, including the future Mayor Adams.

e 2010s was the decade that Black activists dreamed of when they knocked on doors for Sutton or

On the same day de Blasio secured a commanding victory in the primary, Ken ompson, a young Black lawyer, unseated Charles Hynes, the longtime Brooklyn district attorney, who was white. Adams, a state senator, was elected the rst Black borough president of Brooklyn that same year. ( ompson died of cancer in 2016.)

Brooklyn—Bedford-Stuyvesant, Crown Heights and Prospect Heights in particular—had o cially supplanted Harlem. It was only a matter of time before the Brooklyn Democratic Party would get its second Black leader, Rodneyse Bichotte, who also became the rst woman to lead the party organization. Like her white predecessor, Frank Seddio, Bichotte has tangled with progressive reformers, but she’s managed to hold on to her post amid ideological divisions that won’t soon diminish.

“I’m the rst Black woman and rst woman to run the party. People were a little bit shocked; they felt I was new, but I’ve been around for some time,” said Bichotte, an assemblywoman. “ e Hakeems, the Erics, the Tishes have put in their time. ey’re rising with merit. is is not spoon-fed. ese are people who worked for years.”

And now that work has paid o . e work of acquiring community power is done. Now that power will be wielded. ■

Grassi fields an annual survey to help food and beverage manufacturers assess the state of the industry in New York and New Jersey. This year, we partnered with Crain Communications to produce and field it. The process was easy and the results could not have been better. Crain’s helped us capture feedback and report on the industry trends and outlooks that matter most to the businesses we support.

Sarah Cirelli, Chief Marketing Officer Grassi Advisors & Accountants

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$2 billion per year to the MTA.

On CBS, First Deputy Mayor Sheena Wright warned that the extra $500 million in annual MTA support could come with consequences for the city’s residents.

“It is extremely difficult and really will harm the city in its ability to deliver services,” Wright said, adding that by and large the city was pleased with Hochul’s budget priorities, such as building housing and allocating greater resources toward mental health care.

“At a time when we are reeling from the asylum-seeker crisis—$1.4 billion of unbudgeted funds we had to spend this year, $2.8 billion next year,” Wright added. “And really trying to come out of Covid to try to have a real economic recovery for the city, this is the absolute worst time to put [in] an unfunded $500 million mandate, and it really will impact our ability to do lots of other things.”

Hochul’s plan to salvage the finances of the MTA includes a mod- est raise to payroll taxes for downstate businesses, diverting revenue from in-the-works casinos and requiring an extra $500 million per year in city funding.

The division threatens to become a fault line between Adams’ and Hochul’s typically aligned administrations. The governor’s office did not immediately respond to Adams’ concerns.

Political tug of war

MTA funding will be a crucial piece of lawmakers’ budget negotiations ahead of the new fiscal year, which begins April 1. The political tug of war over the $500 million in annual aid puts the MTA in a precarious position as it works to plug ance the MTA’s books. At a state budget hearing, Lieber acknowledged that digging the agency out of its fiscal hole will likely have to happen without federal support.

Lieber said he has urged federal officials to come up with new relief dollars for the MTA and other cash-strapped agencies struggling to adapt to post-pandemic ridership trends, but “the politics in Washington doesn’t look like it’ll produce operating assistance for transit.” a $600 million budget gap this year and prepares for a $1.2 billion deficit in 2024 due to pandemic-induced shifts in ridership.

“The discussion has to unfold,” said Janno Lieber, the MTA’s CEO and chair. “I hope and expect it will get worked out. It’s still on the table.”

The funding friction between the city and state speaks to the broader challenge of finding ways to bal-

Adams’ concern over Hochul’s fiscal rescue plan for the MTA finds him in uncommon alignment—though somewhat at cross-purposes— with left-wing Democrats in Albany. Queens Assembly member Zohran Mamdani, a Democratic Socialist who has proposed his own rescue package known as Fix the MTA, has slammed the state’s proposal for not providing enough funds to improve MTA service and grow ridership, thereby growing revenue.

Last year a panel jointly formed by Adams and Hochul issued a report, “Making New York Work For Everyone,” in which the panel’s members recommended improv- ing mass transit’s reliability and offpeak service as part of a broader effort to encourage riders’ return.

Mamdani and his colleagues have bristled at the fact that Hochul’s plan does not avoid the need for an upcoming 5.5% fare increase—the MTA says it needs at least an additional $350 million in annual funds to avoid raising fares.

Hochul’s budget ultimately stabilizes the agency but fails to lay the groundwork for long-term solutions, Mamdani argued.

“New Yorkers cannot afford for Albany to disregard the MTA’s other crises,” he said. “We must return to NYC with a budget that really makes our transit system safer, more affordable and more livable.” ■