Sunday Summary: Back to Business!

Do you remember the [before time](? The long, long ago? And, by that, we mean summer Fridays? Another Labor Day is officially in the books and that means aside from working a full shift on Fridays, we’re in the final third of 2024. It’s time to get one’s head down and finish out the year (as contradictory and bumpy as it’s been) as strongly as possible. One person who might end the year on a very high note is Larry Silverstein. For the past 23 years Silverstein has been continuously toiling away in Lower Manhattan on the World Trade Center, and, after unprecedented success, there was an element missing in the realization of his grand plans: 2 World Trade Center. Years ago Silverstein hired the starchitect Bjarke Ingels to come up with a design (and Ingels [came up with a beaut]() but Silverstein couldn’t find a blue-chip tenant to anchor the massively ambitious project. This week we learned that he might have. Apparently, Silverstein is [in talks]( with American Express. The company is currently nearby at Brookfield’s 200 Vesey Street and is conducting a thorough examination of its current space to assess its real estate needs. Of course, Silverstein is not the only one who’s been busy. While the bumps are real and persistent (see below), there was some unadorned good news last week when JLL [issued a report]( saying that there had been 1.3 million square feet of Manhattan office space leased in August, and that the third quarter was shaping up to be the strongest quarter (thus far) of 2024. And that’s not all: So far, 17.6 million square feet of office has been leased in 2024, 27 percent more than at the same time last year. “We anticipate this increased leasing volume to remain elevated through the fourth quarter as availability of new and trophy space continues to narrow,” said JLL’s Evan Margolin. “Competition for space and approaching lease expirations are often the drivers for execution of transactions that have been delayed by indecision.” One sees this in leases like Convene [taking 72,000 square feet]( at 30 Hudson Yards, or Virgo Business Centers [re-upping their 41,000 square feet]( at 1345 Avenue of the Americas, or the hedge fund Christofferson, Robb & Company [taking 18,800 square feet]( at 680 Fifth Avenue. the other hand… It wasn’t such a good summer for everybody. In case you missed it, RFR has been [having a rotten time]( of it. At least five of its loans have gone into special servicing or are facing foreclosure. That being said, RFR chief Aby Rosen has been putting on a brave face. “Our focus on top-tier assets has enabled us to achieve premium rent and occupancy levels, as evidenced by the successful lease-up of the Seagram Building at record rates and [the recent sale of 980 Madison Avenue]( to Bloomberg at a record price per square foot,” Rosen said in a statement to CO, even as he indicated that inflated interest rates have introduced “new challenges in managing capital stacks, even for properties that are healthy and well leased.” Given RFR’s need for capital, it doesn’t look so surprising that SL Green Realty [purchased the senior debt]( on RFR’s property at 522 Fifth Avenue “at a discount.” (The loan was for $224 million.) But RFR is hardly the only one with these kinds of debt problems. Last month Michael Shvo’s [eponymous firm]( and [Deutsche Finance]( [defaulted on around $200 million]( in debt tied to the luxury condo and hotel Mandarin Oriental Residences Beverly Hills. And the rules are [about to get tighter]( (although they’ve been tightening for a while) for doing business with Fannie Mae and Freddie Mac, thanks to some [embarrassing high-profile cases]( of loan fraud. “In the short term and maybe even in the intermediate term, it seems highly likely that these changes will result in fewer loans while they’re working out the process and everyone is getting used to this, so the timing couldn’t be worse in terms of impact,” said Herrick Feinstein partner Neil Shapiro. “Borrowers will be suffering the consequences of having to learn the new process, and it’s going to be more highly scrutinized.” Promotions, etc. There were interesting people moves last week. After spending the last 11 months in bankruptcy limbo, Rite Aid named Matt Schroeder as [its new CEO](. (Said bankruptcy has also meant that the pharmaceutical retailer had cut its number of stores from 2,000 to 1,400. And it’s not the only retailer facing bankruptcy. LL Flooring — formerly known as Lumber Liquidators — [filed for chapter 11]( last week, too. And 25-year-old development firm NDC is [calling it quits](.) Another post-Chapter 11 hire is Damola Adamolekun, the former CEO of P.F. Chang’s, who was just named [the new CEO]( of Red Lobster. Also, Jodie Poirier [was named]( the new president of occupier services for the Americas at Colliers. Two views of Florida Publix, the popular grocer, likes what it sees in Florida. On Tuesday we learned that the retailer bought not one but [two shopping centers]( in Davie, Fla., for $82.9 million from [PGIM Real Estate]( and [Southeast Centers](. A day later, Publix nearly doubled its outlay with [two more shopping centers]( in Palm Beach, which, according to JLL, brings the combined total to $140.2 million. But not everyone is drinking the Florida Kool-Aid. In fact, one prominent (and relatively recent) newcomer to the Sunshine State, VC giant Andreessen Horowitz, has decided to [give up](its Miami Beach office. Ah, well. One figure who is decidedly not leaving Florida is [Related Group](’s Jorge M. Pérez. This week we learned that Related and [Integra Investments]( secured [a $527 million construction loan]( from Tyko Capital to build a St. Regis-branded condo tower in Brickell, which will even get a Robert A.M. Stern Architects design. Take a byte out of this As you’re reading this, just be thankful that we live in an age of plenty, as far as servers and data centers are concerned. But this is a real estate sector that is changing rapidly. “I’ve been exclusively focused on data centers for the last 15 years,” said Kristina Metzger of [CBRE,]( “and, from where I started to where I am today, it’s a completely different industry.” Indeed, if you think it’s a sector to be safely ignored, consider this: A recent Moody’s Analytics report said that global investment in new data centers over the next four years will reach $2.2 trillion. You can read all about it [here](. But, when you finish, get away from the phones, computers and everything else tech-related, get outside, and wonder how summer could have slipped away so fast. See you next week. [View in Browser]( | [Advertise]( | [Forward to a Friend]( [Manage your email preferences or unsubscribe]( [Share your thoughts: Help us improve with our quick feedback survey!]( [Commercial Observer]( © Copyright 2024 [Observer Media]( 1 Whitehall Street, Floor 7, New York, NY 10004 This newsletter was published 09/08/2024