Commercial Observer – July 8, 2025

JULY 8, 2025

BANKING ISSUE

Goldfinger Look, Joseph Fingerman understands if you’re unfamiliar with Peapack — that’s why they hired him

TABLE OF CONTENTS

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Max Gross Editor in Chief

Cathy Cunningham Executive Editor

Tom Acitelli Deputy Editor

Greg Cornfield Associate Editor

Skip Card Copy Editor

30 4 NEWS BRIEFS

The Takeaway

Lease Deals of the Week

17 FINANCE Debt Deals of the Week Chart Finance

Sona Hacherian Strategic Account Director

MARKETING & EVENTS Samantha Stahlman

Office Amenities? Puh-leeze.

Senior Events Manager

Multifamily experts at a recent Commercial Observer forum talked creative solutions.

Partnerships Director

Director of Audience

Faith Akinboyewa

32

DESIGN, PHOTO & PRODUCTION Jeffrey Cuyubamba Art Director

Rohini Chatterjee Senior Visual Designer

Jim Sewastynowicz

34

Photo Editor

Eliot Pierce SVP, Product & Operations

38 ENDNOTES

Francesca Johnson

The Plan

Brianna Scottino

Director, Revenue Operations Account Coordinator

Ramon Encarnacion IT Manager

Chart Finance

OBSERVER MEDIA

Back and Forth in Banking

38

Why more banks are selling — and then leasing back — their branches.

Proptech investors weigh when to deploy funds in an iffy business climate.

Senior Partnerships Director

Tariffs have started to drag significantly on demand for new industrial space.

How About This?

Come On, Move!

SALES

Trade Ya

New York City commercial real estate begins the search for common ground with mayoral front-runner Zohran Mamdani.

How a private bank seized on the regional banking crisis to expand its business into Gotham.

Social Media Editor

Mark Rossman, Olivia Cottrell

Coming to Terms

Leaders of the Peapack

Josh Rozbruch

30 FEATURES

Try designing a spaceship or space station to make it more pleasant.

20

Staff Writers

Brigitte Baron

Columns Jolie Milstein; Suhail Y. Tayeb and Amy Myers Jaffe.

8 LEASES

Andrew Coen, Isabelle Durso, Julia Echikson, Mark Hallum, Brian Pascus, Amanda Schiavo, Nick Trombola

24

Joseph Meyer Chairman

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task for his rent-freeze stance. “Let’s be clear,” Adams wrote, “demands to ‘freeze the rent’ are shortsighted and risk worsening already deteriorating housing conditions — putting tenants’ health and safety in harm’s way.”

Kenny Burgos, CEO of landlord group the New York Apartment Association, agreed.

“Every year the Rent Guidelines Board is put in a horrible position because elected officials do nothing to lower the cost of housing,” Burgos said in a statement. “While we are disappointed that the RGB once again adjusted rents below inflation, we appreciate that they stood

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WHAT THEY SIGNED UP FOR: Zohran Mamdani supporters have rallied behind halting rent hikes.

up to political pressure calling for rent freezes that would accelerate the financial and physical deterioration of thousands of older rent-stabilized buildings.”

The board also voted for no increases for hotel-related housing, including SROs and lodging or rooming houses. —Larry Getlen

Manhattan Office Notches Busiest Half-Year Since 2014 Manhattan’s office market recorded its strongest six months of demand since 2014 during the first half of 2025, despite a decline in leasing activity in the second quarter.

Leasing activity during the quarter slid by 18.9 percent from the previous three months, to 9.23 million square feet, according to numbers last week from Colliers. However, second-quarter leasing activity was still 28 percent above the five-year quarterly average of 7.21 million square feet and 13.9 percent higher than the 10-year average of 8.11 million square feet.

The quarter-over-quarter decline can be attributed to an unusually active first quarter, Franklin Wallach, executive managing director of research and business development for Colliers in New York, told Commercial Observer. Tenants leased 11.4 million square feet in the first quarter of the year.

“Was [the dip] a major surprise? No,” Wallach said.

“Because it was such a number to beat from Q1. So that was a very tall order to repeat.”

Overall, the activity in the second quarter highlighted a healthy market with strong demand.

“If you took just the Q2 leasing by itself, which was over 9 million square feet, is that a healthy quarter of activity?

Sure is. It beat the five-year average,” Wallach continued.

“The overall Manhattan market over the last 25 years averages out around 8 to 8.5 million square feet of leasing per quarter. That’s the typical quarterly Manhattan average over the last quarter century. This was over 9 million square feet.

That’s a solid quarter.”

Some of the second quarter’s largest transactions were the 1.08 million-square-foot lease at 770 Broadway by New York University, Amazon taking 330,000 square feet at 10 Bryant Park, and law firm Goodwin Procter inking a 250,000-square-foot lease at 200 Fifth Avenue.

Manhattan leasing activity for the first half of the year totaled 20.63 million square feet, a rise of 42.2 percent compared to the same six-month period in 2024. If demand continues at this pace for the rest of 2025, Colliers predicts that full-year leasing could hit 41.26 million square feet, surpassing 2024’s total by 23.7 percent. —Amanda Schiavo

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Against the ongoing soundtrack of protesters loudly chanting “Freeze the Rent! Freeze the Rent!” New York City’s Rent Guidelines Board (RGB) voted June 30 to raise the rent on rent-stabilized apartments by 3 percent for oneyear leases and 4.5 percent for two-year leases.

The debate before the vote, which passed 5-4, contained pointed positions from both sides of the issue.

“Inflation is 4 percent. It should be the starting point for a discussion on one-year leases,” said board member Christina Smyth, who voted against the current raises.

“This board does not value affordability,” countered board member Adán Soltren, who noted that the board had now raised rents 12 percent in total over the last four years, and who also voted against the raises. “There is no way we can come to these decisions four times in a row if we did.”

This latest annual vote likely had more eyes on it than ever before given the prominence of rents as an issue in this year’s mayoral race.

New York State Assemblyman Zohran Mamdani, the Democratic nominee for mayor, famously made freezing rents for the roughly 2 million New Yorkers living in rent-stabilized apartments a key element of his campaign.

Mamdani’s official platform references the incumbent mayor, who is on the November ballot as an independent: “Eric Adams has taken every opportunity to squeeze tenants, with his handpicked appointees to the Rent Guidelines Board jacking up rents on stabilized apartments by 9 percent (and counting) — the most since a Republican ran City Hall. As mayor, Zohran will immediately freeze the rent for all stabilized tenants, and use every available resource to build the housing New Yorkers need and bring down the rent.”

Adams had called for the board to “adopt the lowest increase possible while protecting the quality of housing for millions of New Yorkers” in a statement released on the morning of the vote.

While expounding on the massive rent expense facing so many New Yorkers, Adams, without mentioning his opponent’s name, also took Mamdani to

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Amid Mamdani’s Rent-Freeze Pledge, NYC Board OKs Increases

SOARING: Office leasing volume was up 42.2 percent annually.

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Related’s Hudson Yards Expansion Has a Financing Plan

HIGH HOPES: The new addition is due to include four towers and 4,000 apartments as well as public green space.

Three weeks after the New York City Council approved necessary zoning changes for Related Companies’ Hudson Yards housing proposal, lawmakers greenlighted a financing structure for a key component of the 4,000-unit development.

The City Council early last week unanimously passed a payment-in-lieu-of-taxes (PILOT) model to fund a $2 billion platform to be built over the Western Rail Yards for Related’s large-scale project consisting of four mixed-use towers.

“This is a historic moment for New York City, and this complex and transformational project would not be moving forward without the strong support and collaboration we’ve had from our city leaders on both sides of City Hall,” Jeff Blau, CEO of Related Companies, said in a statement.

Related’s Hudson Yards project will designate 625 of the 4,000 apartments as affordable housing. The development will also include a 2.4 million-square-foot office tower, a hotel, a new public elementary school and 6.6 acres of public green space.

The council’s zoning approval on June 11 came on the heels of Related striking an agreement with Mayor Eric Adams to boost the number of affordable housing units by 139. Related and Oxford Properties previously planned a casino development at Hudson Yards with Wynn Resorts before the gambling operator pulled out on May 19, citing persistent opposition to the project from local residents. —Andrew Coen

Sherry Wang Joins Vistria Group as Partner

A developer is seeking approval to build a massive mixed-use development along the waterfront in Brooklyn’s Gravesend neighborhood.

Robert Konig, through the entity Westshore Views LLC, filed a rezoning application with the New York City Department of City Planning to build a 1.6 million-square-foot project on the 737,117-square-foot development site at 4302 Westshore Avenue, which is currently being used for car storage.

The project, which requires zoning approval from the city, would include 24 townhouses and 1,457 residential units across two high-rise buildings — approximately 437 of which would be affordable, the filing said.

The development would also comprise 10,448 square feet of retail, and 80,034 square feet of community facility space, approximately 75,000 square feet of which would be used for a 528-seat school. Plans also call for 143,190 square feet of public open space, including a 74,930-squarefoot public waterfront area, according to the filing. Konig also wants to build a 994-car parking lot and a 48-slip marina for residents.

If the city’s School Construction Authority does not approve the site for a public school, Konig plans to use the space for a private school or residential uses, the filing said.

“Overall, the applicant intends for the proposed project to be based on resiliency features that safely allow the siting of a residential community on the underutilized

GOOGLE EARTH

Developer Seeks to Build 1,500 Homes on Brooklyn Waterfront

LONG VIEW: Developer Robert Konig has owned the Gravesend, Brooklyn, acreage since 2012.

development site,” Konig wrote in his application.

Konig, who has owned the Gravesend land through a separate entity since 2012, could not be reached for further comment.

The developer’s proposed zoning

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changes related to the project include closing and reducing a portion of Bay 44th Street, reducing the width of Westshore Avenue, and renaming Westshore Avenue as a continuation of Bay 43rd Street, according to the filing. —Isabelle Durso

Former Goldman Sachs executive Sherry Wang is bringing her expertise in deploying investment funds toward affordable and workforce housing to the Vistria Group, where she started a new role as a partner late last month, according to the firm.

“Sherry is one of the most experienced investors in public-private real estate, and is known for her track record of scaling innovative solutions to address affordable housing challenges,” Margaret Anadu, senior partner at Vistria, said in a statement.

Anadu and Wang had worked together at Goldman Sachs for about 15 years, according to Vistria. Goldman Sachs did not respond to a request for comment.

Wang was previously managing director of the Urban Investment Group at Goldman Sachs, where she deployed about $10 billion in funds to low-income housing projects across the U.S., including a $242 million construction loan for the buildout of a 414,000-square-foot facility on 125th Street in Harlem. Wang also led an initiative at Goldman Sachs to invest $10 billion in programs to improve the lives of at least 1 million Black women by 2030.

Also joining Vistria Group as new hires are James Wreschner, formerly of the Jonathan Rose Companies, and Ruby Shi, who is making the transition from Brookfield Properties. —Mark Hallum

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LEASES

Invesco

Paul, Weiss

Pinterest

200,000 Renewal

84,672 Expansion

83,000 Relocation

Investment management company Invesco has renewed over 200,000 square feet of office space at Brookfield Properties’ 225 Liberty Street, according to a report from Savills.

The duration and exact size of the lease, the broker reps for both parties, and the asking rent were unclear, though a recent listing for space on the building’s 26th floor quoted a price of $72 per square foot.

225 Liberty Street, one of the five buildings that make up Brookfield Place, was formerly known as Two World Financial Center. It contains nearly 2.5 million square feet of rentable space.

Other tenants in the building include fintech firm EquiLend, which signed a lease in March for 19,806 square feet on the 10th floor of the 44-story building; the marketing consulting firm SimonKucher & Partners, which took 27,458 square feet in the building in 2022; and trading firm DRW Holdings, which occupies 17,012 square feet, as Commercial Observer previously reported.

The not-for-profit College Board recently took 41,000 square feet in the building, according to the New York Post.

Brookfield did not respond to a request for comment, and Invesco did not respond to a request for information.

According to its website, Invesco manages over $91 billion in real estate assets across the globe. —Larry Getlen

The 765,000 square feet that law firm Paul, Weiss, Rifkind, Wharton & Garrison took at 1345 Avenue of the Americas in late 2023 wasn’t enough.

The firm — popularly known as Paul, Weiss — subleased an additional 84,672 square feet on the 29th and 30th floors of the Fisher Brothers-owned building at some point in the second quarter, a market report from Savills stated. The expansion brings the firm’s total footprint to 849,672 square feet.

Terms of the sublease were unclear, but a listing by Noah RE stated that the asking rent is $87 per square foot for a term ending in October 2025.

Brokers from JLL represented the sublandlord, while Chris Mongeluzo, Moshe Sukenik and Brian Cohen of Newmark handled negotiations for Paul, Weiss.

JLL and Newmark declined to comment.

The identity of the sublandlord is unclear, but Global Infrastructure Partners is the last known tenant to lease the 29th and 30th floors. The asking rent at the time started at $95 per square foot.

Globa l Inf rastr uct ure Partners could not be reached for comment, while Paul, Weiss did not respond to a request.

Paul, Weiss originally moved from 550,000 square feet at 1285 Avenue of the Americas, and has a 20-year lease at 1345 Avenue of the Americas.

Fisher Brothers did not respond to a request for comment. —Mark Hallum

Visual discovery and social media platform Pinterest has signed an 83,000-square-foot lease across the entire 13th floor at SL Green Realty’s 11 Madison Avenue, the landlord announced.

The length of the lease is 11 years and the asking rent was $90 per square foot, a source close to the deal told Commercial Observer. Pinterest is relocating from its office roughly seven blocks away at 225 Park Avenue South, where it currently occupies 40,000 square feet.

“We’re excited to welcome Pinterest to 11 Madison Avenue,” Steven Durels, executive vice president and director of leasing and real property at SL Green, said in a statement. “They join an extraordinary tenant roster.”

Pinterest was represented by Evan Margolin, Justin Haber and Michael Berg of JLL, while SL Green was represented by Brian Waterman, Scott Klau, Erik Harris and Brent Ozarowski from Newmark. JLL did not respond to a request for comment. Newmark declined to comment.

There had been talk of Pinterest taking over the Madison Avenue space back in May, but nothing was finalized at the time.

11 Madison Avenue is a 30-story, 2.34 million-square-foot office tower between East 24th and East 25th streets in Manhattan, just east of Madison Square Park. Other notable tenants of the building include financial institution UBS, media giant Sony, and Japanese beverage company Suntory.

—Amanda Schiavo

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Sumitomo Mitsui Banking Corp.

Little Big Hospitality

50,000 Expansion

45,000 New

Japanese multinational financial institution Sumitomo Mitsui Banking Corporation expanded its presence at the Stahl Organization’s 277 Park Avenue office tower by 50,000 square feet, bringing its total footprint within the 50-story building to 316,000 square feet.

The length of the lease and the asking rent were not available, but asking rent at 277 Park Avenue can range between $120 and $140 per square foot, according to Cushman & Wakefield. Mark P. Boisi, Bryan Boisi and Stephen Bellwood from C&W represented Stahl in the deal, the New York Post first reported. C&W did not respond to a request for comment.

It is unclear who represented Sumitomo Mitsui Banking Corporation in this expansion deal. However, previous Commercial Observer reporting noted that JLL’s Bill Peters represented the tenant when it expanded its footprint at 277 Park Avenue in 2013. JLL and Sumitomo Mitsui did not respond to a request for comment.

The Stahl Organization refinanced its 1.9 million-squarefoot office building at 277 Park Avenue, which is at the corner of Park Avenue and East 48th Street, with a $650 million commercial mortgagebacked securities loan in August of 2024. —A.S.

Little Big Hospitality, a company focused on unique and memorable experiences for families, has signed a 45,000-square-foot lease at CIM Group’s 50 Columbia Heights building in Brooklyn Heights, the landlord announced.

The company is launching a new family-oriented membership club called The Beginning Clubhouse, which is set to open next summer in the building, also known as the Panorama Office.

The Beginning Clubhouse will offer members curated activities and classes for children, child care, food and beverage options, and coworking spaces, along with fitness and wellness amenities. “[There are] beautifully designed play areas and enriching programs for children alongside a full-floor lounge for work, fitness and wellness facilities, and incredible F&B options — all under one roof,” Michael Schoen, founder and CEO of Little Big Hospitality, said in a statement.

The length of the lease and the asking rent were not disclosed.

However, the average asking rent for retail space in Brooklyn Heights ranges between $80 and $200 per square foot, according to the latest Real Estate Board of New York data.

Marc Schoen from Savitt Partners represented Little Big Hospitality and The Beginning Clubhouse, while Peter Whitenack, Mai Shachi and Andrew Connolly from Newmark represented CIM Group. Neither firm responded to requests for comment. —A.S.

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FROM LEFT: COURTESY BROOKFIELD PROPERTIES; COURTESY FISHER BROTHERS; PROPERTYSHARK; COMMERCIAL OBSERVER FILE; COURTESY CIM GROUP

Lease Deals of the Week

LEASES

FROM LEFT: BEYOND MY KEN/CC BY-SA 4.0 VIA WIKIMEDIA COMMONS; COURTESY KOEPPEL ROSEN; PROPERTYSHARK (2); RENDERING COURTESY COOP

Lease Deals of the Week Monroe Capital

Publicolor

Free People

Sent

15,000 Expansion

6,850 Renewal

5,500 Relocation

4,609 New

Monroe Capital leased an additional 15,000 square feet of Munich Re’s office building at 320 Park Avenue, doubling its footprint and giving the asset management firm the entire 21st and 30th floors.

The length of the lease was not available, but asking rent was $170 per square foot, a source close to the deal told Commercial Observer. News of the lease was first reported in the New York Post.

Frank Doyle, David Kleiner and Carlee Palmer from JLL represented Munich Re in this lease, while Greg Taubin from Savills represented Monroe. JLL and Savills declined to comment, and Monroe did not respond to a request for comment.

Monroe had previously leased 15,000 square feet across the building’s entire 30th floor in December, the Post noted, after moving offices from 126 East 56th Street. Asking rent for that first space was $140 per square foot.

Munich took full ownership of 320 Park Avenue, a 35-story office building also known as the Mutual of America Building, for more than $500 million in late 2024 from its joint venture partner Mutual of America, the Post reported at the time.

Other office tenants at 320 Park Avenue include a corporate location of Flagstar Bank, financial institution Fidelity Investments, and wealth management services provider Raymond James. —A.S.

Educational development organization Publicolor is extending its stay at 20 West 36th Street.

The nonprofit organization, which focuses on at-risk youth, signed a deal with landlord Koeppel Rosen to keep its 6,850 square feet on the ninth floor of the building, which is between Avenue of the Americas and Fifth Avenue. The landlord did not disclose the length of the lease or the asking rent in the deal.

The average asking rent for Midtown in May was $81.62 per square foot, according to a report from CBRE. “The building’s central location in Midtown Manhattan ensures that students from all over the New York area can easily access Publicolor’s headquarters,” Max Koeppel, who represented Koeppel Rosen in-house, said in a statement.

It’s unclear who represented Publicolor in the deal.

Publicolor moved into the 12-story building in August 2015, when it signed a 10-year lease that doubled the size of its previous space. Other tenants include American Friends of Magen David Adom, Martin Brudnizki Design Studio and packaging and logistics company Pims Incorporated. —M.H.

Women’s clothing retailer Free People is moving its Union Square store to a different spot within its building, Commercial Observer has learned.

Free People, which is part of a brand portfolio called URBN that includes Urban Outfitters and Anthropologie, has signed a 10-year lease for 5,500 square feet at the base of Kalimian Properties’ 79 Fifth Avenue, according to a source with knowledge of the deal. Asking rent was $400 per square foot.

Free People moved into its current mid-block space at the Fifth Avenue building between East 15th and East 16th streets in 2007, and it will relocate to the property’s corner retail space as part of the deal, the source said. Its new space spans 4,300 square feet on the ground floor and 1,200 square feet in the basement.

McDevitt Company’s Tim Duffy and Wade McDevitt brokered the deal for the tenant, while Newmark’s Peter Whitenack and Robert Cohen represented the landlord.

Newmark declined to comment, while spokespeople for Free People and McDevitt did not respond to requests for comment.

The landlord could not be reached for comment.

Free People’s Union Square store was the retailer’s first location in Manhattan, and it now has four other New York City spots throughout Manhattan and Brooklyn, according to its website.

—Isabelle Durso

Text messaging platform Sent has signed a lease for 4,609 square feet of office space at 157 West 18th Street.

Neil King, Maxwell Tarter and Kelly Tipton with CBRE represented landlord Caspi Development. Eric Siegel and Chery Anavian at LSL Advisors represented Sent. The lease first appeared on Traded.

The building was recently fully renovated. A CBRE listing page for the building shows that Caspi has been marketing three full floors — the third, sixth and seventh — each spanning 4,609 square feet. All except the seventh are described as “brand-new prebuilt with 10-foot ceilings,” with patterned hardwood floors and glass-front conference rooms. A Google listing indicates that Sent took the seventh floor, which is the building’s penthouse and features double-height ceilings and a private terrace.

Caspi purchased the building in 2019 for $23.2 million from an undisclosed buyer, according to public records.

The length of the lease and the asking rent were not disclosed.

Asking rents for office space in Chelsea for the first quarter of 2025 averaged $67.82 per square foot overall and $91.40 per square foot for Class A space, according to a report by Cushman & Wakefield.

LSL, CBRE and Caspi did not respond to requests for comment.

—L.G.

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Cranial Technologies 4,456 New

Medical equipment manufacturer Cranial Technologies is moving into Monadnock Development’s newly built headquarters building in Gowanus, Brooklyn.

Cranial, a non-surgical provider for the treatment of flat head syndrome in babies, has signed a lease for 4,456 square feet on the sixth floor of Monadnock’s sixstory, mixed-use building at 300 Huntington Street, according to landlord broker CBRE. The medical firm has more than 100 clinics nationwide, but its deal at 300 Huntington represents its first office in Brooklyn, CBRE said.

“This commitment by Cranial Technologies speaks to the high-quality office space, highly curated amenities and ideal location of 300 Huntington Street,” CBRE’s Patrick Dugan, who brokered the deal for the landlord along with Joseph Cirone and Jesse de la Rama, said in a statement.

The length of the lease and asking rent were unclear, but office asking rent at the building ranges from $50 to $60 per square foot.

Colliers’ Joe Speck and Chad Poff represented the tenant in the deal. Spokespeople for Cranial, Monadnock and Colliers did not respond to requests for comment.

Monadnock’s 136,000-squarefoot development west of the Gowanus Canal was completed in January 2024. The developer itself currently occupies 40,000 square feet on the second and third floors for its headquarters, along with 15,000 square feet in the backyard for its contractor shop. —I.D.

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As NYC Builds a New Normal, Business Improvement Districts Lead the Way

10 | JULY 8, 2025 | COMMERCIAL OBSERVER

The Ron Jackson Trio performing at Grand Central Partnership’s Summer Solstice Music Festival.

happy hour concerts on Wednesdays from May through September at Pershing Square Plaza West, on Park Avenue between 41st and 42nd streets.

The Partnership also partnered with the Arts and Architecture Conservancy at Saint Peter’s, at 601 Lexington Avenue, to host lunchtime concerts on Thursdays from July through September. The Rudin family, owners of 345 Park Avenue, are sponsoring lunchtime shows at their building every Wednesday through August.

“We hosted 63 or so concerts last year. We’re up to 75 this year,” said Cerullo.

In addition to Pershing Square West Plaza, the Partnership has introduced Pershing Square East this year, expanding its car-free street availability for public use.

“There are now two beautiful public spaces with tables, chairs and plantings,”

Vibrant pedestrian activity in Midtown East.

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GOOR STUDIO ON BEHALF OF GRAND CENTRAL PARTNERSHIP

ew York City’s neighborhood associations and business improvement districts (BIDs) are the city’s quiet heroes, keeping our streets clean, fun and lively. From hiring the street cleaners that keep our streets garbage-free, to helping new businesses trumpet their arrival, to establishing pedestrian plazas that provide a needed respite for shoppers, BIDs are the smoothly purring engine that keep the city surging forward.

The past five years were especially challenging for New York City’s BIDs, as navigating COVID and the confusion of the post-pandemic years lent an urgency to their activities and planning.

But these days, the city is entering a new phase. While New York is not without its challenges, our BIDs can now aim their determined focus at enhancements instead of survival.

“This was a year of progress,” said Fred Cerullo, president and CEO of the Grand Central Partnership, which covers the area in Midtown bordered by 35th Street, 54th Street, Second Avenue and Fifth Avenue. “It was a year of breathing new life into things and continuous improvement. We’re always looking for ways to do better and, in some cases, bigger.”

The Partnership tripled its pedestrian-counting capabilities in the area, helping it more accurately plan everything from programming to garbage pickup.

Cerullo notes that local pedestrian traffic has averaged around 90 percent of 2019 numbers.

“That’s 90 percent on average, which means there are days where we have 130 percent (over 2019’s numbers) in the district,” said Cerullo.

“The people are back. You can tell just by walking down any street in Midtown East. You can barely get in the front door at some of our restaurants.”

One significant reason for this has been the addition of the Long Island Rail Road stop at Grand Central, which has made the area more convenient for Long Island residents.

“We’ve seen a 109 percent increase in people with Long Island ZIP codes coming into the neighborhood,” said Cerullo, quoting data from Placer.ai. “That’s not LIRR usage. That’s Long Islanders in the neighborhood.”

To cater to the growing number of visitors, Grand Central Partnership has increased its free live music programming.

The Pershing Square Sounds series features lunchtime jazz shows on Tuesdays and

GOOR STUDIO ON BEHALF OF GRAND CENTRAL PARTNERSHIP

How the City’s Business Improvement Districts Help Create a Vibrant New York

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ACCESS TO EVERYTHING IS EVERYTHING.

Discover the best of Midtown East, where access to everything is everything.

Celebrate summer with free live music at Pershing Square Plaza West, and explore the recently completed Pershing Square Plaza East, featuring Citi Bike access , new seating, and plantings. Enjoy exceptional outdoor dining at neighborhood cafés and restaurants, take in art and architecture throughout the district, and experience the color and vibrancy of our seasonal horticulture program.

With seamless connections through Grand Central Terminal and Grand Central Madison, getting here and exploring more is simple.

Downtown Alliance Public Safety Officers on Patrol

said Cerullo, who added that Pershing Square East also hosts the city’s largest bike-share program.

In addition to beautification efforts and leisure time initiatives, BIDs can also be political advocates for area businesses.

Jessica Lappin leads the Downtown Alliance, which celebrates its 30th anniversary this year serving the area bordered by City Hall, the Battery, the East River and West Street.

With the Lower Manhattan Relocation and Employment Assistance Program (REAP), a major tax incentive for downtown businesses, set to expire at the end of June, Lappin was laser-focused on persuading Albany to renew the program.

The week before we spoke, she succeeded.

“We spent a lot of time and effort lobbying the legislature to have it renewed,” said Lappin. “Businesses moving here get a $3,000 tax credit per employee if they are growing their payroll by 25 percent or moving here from outside of the state. It was a very nice victory, and something we hope people consider when deciding where to relocate their business.”

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DOWNTOWN ALLIANCE

Alliance President Jessica Lappin and staff work to keep neighborhood flowering.

column for business considering a downtown relocation. The area has changed drastically over the past 30 years, evolving from a strictly 9-to-5 business community that became a ghost town at 5 p.m. to much more of a residential and tourist-friendly 24/7 neighborhood.

“We’ve been reflecting on what we’ve accomplished since 1995,” said Lappin. “The neighborhood was on its heels then. That’s why the Alliance was founded, to help revitalize the neighborhood and bring it back.”

Lappin notes that in 2001, the area had six hotels with less than 2,500 rooms total. Today, there are 44 hotels in downtown with over 8,500 rooms available. As for residents, the area covered by the BID had fewer than 15,000 permanent residents in 1995. Today, that number is over 60,000.

“People didn’t have a reason to come downtown in the `90s other than the Statue of Liberty,” said Lappin. “But we have 44 hotels now, which is sort of shocking, and they’re on par with or exceed those in other neighborhoods in Manhattan.”

Lappin notes that concepts pioneered by the Downtown Alliance are now taken for granted, like a widespread composting

Dine Around Downtown Draws Thousands to Community Food Festival

program, or a bikeshare program they ran years before Citi Bike. She also makes the case that the Alliance was directly responsible for the area’s growing residential base.

“In the 1990s, the Downtown Alliance had a truly revolutionary idea to create residential housing in the neighborhood. That may be the single most significant thing the Alliance has done,” said Lappin. “Thirty years ago, turning a downtown office area into a residential neighborhood was a revolutionary concept.

That’s probably the biggest thing the Alliance has contributed, not just here but across the country.”

To satisfy the needs of its growing constituency, the Alliance has expanded its cultural programming. The BID has been hosting Dine Around Downtown, a celebration and sampling of local eateries, for over 20 years. This year’s event, which took place June 11 and was hosted by James Beard-award winning chef Rocco DiSpirito, was its most popular ever, with over 15,000 people sampling cuisine from over 40 area restaurants.

Another continuing and growing tradition for the Alliance is its free concert series, which ran through June. Two locations alternated in offering performances at lunchtime

on Wednesdays: World Trade Center’s North Oculus Plaza, and 140 Broadway. The series paired with the Alliance’s “Art Is All Around” campaign, which placed public art and performances throughout the neighborhood.

The Alliance also sponsors events such as the panel conversation series LM Live, and New York on Film, where screenings of New York City-related movies are followed by in-depth discussions with critics, historians, and people directly involved with the films in question.

Over in the neighborhoods of Flatiron and NoMad, the Flatiron NoMad Partnership serves an area that is home to more sales tax-contributing businesses than any other, handling the area roughly bordered by 20th Street, Sixth Avenue, 31st Street, and Park Avenue South, as well as the full Baruch College campus extending to Third Avenue.

One major priority for the BID has been further implementation of the Broadway Vision plan, a combined effort among the city’s Department of Transportation and several BIDs to turn much of Broadway into pedestrian plazas.

While the plazas are technically temporary, the BID is working with others to make them

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The best views.

The best in class.

The best transit.

The best deals are downtown.

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permanent as part of a more than $100 million capital plan, including the addition of new horticultural and security elements and supportive work below ground.

“We’ve seen terrific vibrancy and numbers when it comes to use of the space, as well as filling retail vacancies up and down Broadway,” said James Mettham, president of the Flatiron NoMad Partnership. “We’ve made this one of the premier commercial corridors, infusing pedestrian plazas, bike lanes, distinctive outdoor dining, and respites for people to enjoy their own time.”

Flatiron NoMad has also hosted several successful art installations. After last year’s incredible exhibit of The Portal, which allowed the public to communicate face to face with people in Dublin, Ireland, on the street in real time, the Partnership hosted Winter Glow in January and February, including interactive artworks like “The Diamonds,” a large kaleidoscopic object that produced a vibrant spectrum of ever-shifting light and sound, and “Spectrum,” which converted human speech into a bedazzling array of waves and pulses.

The BID also pulled out all the stops for Pride Month with Start With Love, which the BID describes as “a monthlong celebration of LGBTQIA+ visibility and community” featuring public art displays and musical performances, and spotlighting LGBTQIA+ businesses and voices in the Flatiron & NoMad communities.

“We’re proud to launch Start With Love: Pride in Flatiron NoMad, honoring the vibrancy and diversity of our community as the starting point of the iconic NYC Pride March,” said Mettham.

On the business side of things, Mettham notes that 70 new retail, street-level businesses have opened in the area over the past year, in addition to several hundred more businesses that moved into local office buildings.

The team at the Partnership offers hands-on neighborhood introductions to everything the district has to offer. From keeping the streets vibrant, clean and safe, to spotlighting new businesses across their platforms, they’re all about creating connections and amplifying what makes each business unique in the neighborhood.

“We’re here to integrate new businesses into the pulse of the neighborhood,” said Mettham. “We don’t just tell them about our service. We elevate their presence, feature them across our channels, and plug them into a dynamic community network.”

On top of all this, BIDs throughout the city are preparing for a significant change in the nature of their areas as more and more office buildings convert to residential, meaning that many of the city’s neighborhoods, following downtown’s lead, will need to transition from office areas to full-on 24/7 neighborhoods.

“We have residential development happening at a rate we’ve never experienced before,” said Cerullo.

“That has us thinking about how we address that increase in residential population. For example, where else can we develop public space for people to sit and enjoy a cup of coffee on a Sunday morning? Where can we find more spaces for not just recreational activities, but more passive experiences that beautify the neighborhood?”

Of course, it’s impossible to say exactly what New York City will look like 20 or even 10 years from now.

But whatever the makeup of this ever-evolving city, our BIDs and neighborhood associations will be keeping pace, doing their best to ensure that New York City’s neighborhoods are clean, safe, vibrant, and as welcoming as possible to residents, commuters and tourists alike.

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Retail space available Grand Central Market at Grand Central Terminal The MTA is soliciting proposals for retail spaces MKT-25 and MKT-26, located in Grand Central Market. Each space is 274 sq. ft., offered individually or combined.

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R E TA I L

Finance

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Banking Issue

18 Blackstone’s megaloan in Jersey City 20 One regional bank is here to stay 24 Banks are the new must-have tenants

FINANCE

Debt Deals of the Week Deutsche Bank, UBS Refinance Mixed-Use Queens Property With $160M CMBS Loan Rentar Development has landed a $160 million debt package to refinance a Queens mixeduse retail and industrial asset, Commercial Observer has learned.

Deutsche Bank , whose lending platform is led by Dino Paparelli, and UBS originated the commercial mortgage-backed securities loan for the developer’s three-story Rentar Plaza building in Middle Village, Queens.

BayBridge Real Estate Capital arranged the financing.

Located at 66-26 Metropolitan Avenue, the 1.43 million-squarefoot Rentar Plaza was constructed

by Garden City, N.Y.-based Rentar Development in 1972. The City of New York is the largest industrial tenant while BJ’s Wholesale Club anchors the retail portion, which is undergoing a renovation as part of a rebranding.

Amazon inked a 10-year lease for 300,000 square feet of warehouse space in February 2020, CO reported at the time.

A representative for Rentar Development said the rebranded 232,000-square-foot retail portion called The Shops At Rentar Plaza is slated for completion in spring 2026 with current tenants BJ’s, FitNation, Eyeworld and VJ Liquors remaining open during construction. Burlington and Catch Air have also signed leases of 28,000 square feet and 18,000 square feet, respectively, with plans to begin construction of new stores soon, according to Rentar.

Officials at UBS and BayBridge did not return requests for comment. Deutsche Bank declined to comment.—Andrew Coen

Blackstone Provides $515M Loan for Phase 1 of Kushner Companies’ The Journal in Jersey City Deal volume typically slows down in the run-up to the July 4 holiday, but for Kushner Companies it’s business as usual.

The firm just sealed a $515 million loan from Blackstone for The Journal, its luxury twotower residential development in Jersey City, N.J.’s Journal Square submarket, Commercial Observer can first report.

The three-year loan — originated by Blackstone Real Estate Debt Strategies (BREDS) — includes two one-year extension options and will be used to complete The Journal’s construction and lease-up. It retires previous construction financing on the project from 2022, when AIG provided a $385 million senior loan and Related Credit Funds provided a $130 million mezzanine loan.

“We thank our construction lenders, AIG and Related for their trust in us three years ago, and are excited to open this bright chapter with Blackstone,” Laurent Morali, CEO of Kushner Companies, said in a statement. “We feel blessed to be able to finance our greatest projects with people we call friends.”

Located at 1 Journal Square, the property spans 2 million square feet and comprises 1,723 apartments across two 52-story glass towers, plus a retail podium housing 40,000 square feet that’s 100 percent leased to Target. Phase 1 — just refinanced by Blackstone — encompasses the 12-story retail podium, the development’s 966-unit north tower and 1,000 parking spaces.

“We are pleased to support the completion of this high-quality multifamily property,” a spokesperson for BREDS told CO. “This transaction reflects Blackstone Real Estate Debt Strategies’ ability to deliver creative, large-scale financing solutions and provide certainty to borrowers amidst market volatility.”

RENDERING COURTESY KUSHNER COMPANIES

Wells Fargo’s Peter Cannava.

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U-B-SIGNING REFIS!

The Journal in Jersey City.

Indeed, there’s plenty of market fireworks to contend with at the moment, and closing a half-billiondollar loan in the midst of the volatility is certainly nothing to sneeze at. As if that weren’t enough to celebrate, the building is also off to the races in welcoming new residents.

“The lease-up couldn’t have started stronger, and we look forward to welcoming our first residents this week,” Morali said.

As such, Blackstone’s big loan closed July 1, the day the building opened to residents.

Further, The Journal’s leasing center opened on June 12 and already 300 leases have already been executed, making the north tower already more than 30 percent pre-leased.

The Journal features views of the Hudson River and the Statue of Liberty. It’s adjacent to the PATH train, which can be in Manhattan in 20 minutes and which makes The Journal an ideal pick for commuting professionals as well as students.

Amenities include a fitness center, an indoor basketball court, indoor and outdoor pools, a plunge pool, a sauna, a bowling alley, a podcast studio and a yoga studio.

The deal fits nicely into Blackstone’s theme of investing in irreplaceable properties in prime locations across the globe, with Journal Square also experiencing population, household income and job growth greater than the wider New York City metro area over the past five years.

“We believe in the long-term potential of Journal Square and are proud to be part of its continued evolution,” Nicole Kushner Meyer, president of Kushner Companies, said in a statement. “This project is about more than just building homes. It is about creating beautifully designed spaces that inspire connection, elevate daily life, and reflect the unique energy and spirit of the neighborhood.”

Newmark’s Jordan Roeschlaub, Nick Scribani and John Caraviello negotiated the debt.

“The process with Blackstone, orchestrated by Newmark, couldn’t have gone more smoothly,” Nick Maki, head of investment management at Kushner said. “We’re grateful for this great execution.”

The Journal’s second phase is also firmly underway. In June 2024, Kushner Companies landed a $295 million loan from Apollo and RXR to fund its construction, with plans to complete the second phase by the end of this year. (Disclosure: Meyer is married to Observer Media owner Joseph Meyer.)

The Blackstone loan brings Kushner Companies’ financing closings to almost $1 billion in the first half of the year alone.

—Cathy Cunningham

Chetrit Completes Discounted Loan Payoff for 404 Fifth Avenue The Chetrit Organization has sealed a discounted payoff for the $65 million loan on its former headquarters at 404 Fifth Avenue, Commercial Observer has learned.

The office building’s loan is being paid down as part of a broader recap of the building, in which a new capital partner — which couldn’t be named — is also being brought in.

The loan on the property, also known as the Stewart Building, was originated by the now-defunct Signature Bank in 2016, becoming part of the $17 billion pool of Signature loans acquired by a joint venture involving Blackstone, Canada Pension Plan Investment Board and Rialto Capital in December 2023, with Rialto also the servicer of the loans.

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Iron Hound Management’s Robert Verrone and Will Forbes led the restructuring negotiations with the lenders on behalf of the Chetrit Organization.

“Over the past three months we have closed three large restructuring or discounted payoffs with Rialto; we appreciate them working with us and we look forward to turning these assets around,” Juda Chetrit said in a statement.

Indeed, in April the Chetrit Organization also secured an extension for the $76.5 million CMBS loan on 459 Broadway and 427 Broadway in SoHo, and a month later the firm extended its loan on 393-401 Fifth Avenue.

Iron Hound’s Forbes and Verrone negotiated the extensions on behalf of the firm in each

instance.

After the 404 Fifth loan missed its maturity date in June 2024, Blackstone filed a lawsuit in January and sought to foreclose to recoup the loan’s outstanding balance of $60.3 million as well as interest, late charges and attorney fees, according to Crain’s New York Business.

With the payoff completed, a resolution has formally been achieved and the lawsuit ends, a source familiar with the transaction said.

The eight-story building, acquired by the Chetrit Organization in 1998, per Crain’s, is completely vacant, and the plan is now to start signing new tenants, sources said.

Blackstone and Iron Hound declined to comment. Rialto officials weren’t available for comment.—C.C.

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FINANCE

Bank of America Refis Micro Industrial Portfolio With $94M Loan WareSpace and its capital partner Jadian Capital have secured a $94 million loan to refinance a portfolio of micro-bay industrial assets, Commercial Observer has learned.

Bank of America provided the loan for the 20-asset portfolio of smaller warehouses operating under the WareSpace brand.

Newmark arranged the financing with a team consisting of Jordan Roeschlaub, Nick Scribani, and Chris Lozinak.

Columbia, Md.-ba se d WareSpace owns small warehouse properties rented out to small businesses all over the U.S., including three locations in Washington, D.C., and Chicago, according to its website. It has been acquiring vacant infill properties over the past three years and converting buildings into industrial suites ranging from 200 to 2,500 square feet, according to Newmark.

“Between strong small business formation and virtually no new infill supply, small bay vacancy is now the lowest in the industrial sector,” Levi Cohen, CEO of WareSpace, said in a statement.

Matthew Hennessy, director at Jadian Capital, said in a statement that the loan from Bank of America “demonstrates how institutional capital providers have come to appreciate the WareSpace value proposition.”

Hennesy added that Jadian is looking to financially back WareSpace’s plans to scale its footprint from 20 to 50 locations over the next “several” years.

Bank of America declined to comment.—A.C.

RENDERING COURTESY BFC PARTNERS

A WareSpace storage location.

Developer BFC Partners has secured a $250 million construction loan to complete the third phase of a major affordable housing development in Coney Island, Brooklyn, Commercial Observer can first report.

The loan, which was provided by Citi Community Capital, will allow BFC to complete the three-building project along Surf Avenue and deliver a total of 1,242 homes to the neighborhood, according to an announcement. Construction is set to be complete in 2028.

The city officially partnered with BFC last week for the project’s Coney Island Phase III, which will bring 420 apartments, roughly 10,700 square feet of commercial space, and about 9,700 square feet of community facility space to 1709 Surf Avenue, as CO previously reported.

“Closing on and starting construction of the third and final phase of this transformational development along Surf Avenue in Coney Island marks a major milestone for our team,” Joseph Ferrara, principal at BFC, said in a statement.

“We are proud to continue investing in the future of this vibrant community and are

A rendering of the Coney Island development.

especially grateful to our city partners and to Citi for their unwavering support and collaboration,” Ferrara added. “Together, we’re building lasting affordability, opportunity and impact for Coney Island.”

The first phase of the project at 2926 West 19th Street was completed in 2021 and created 446 affordable units, while the second phase at 1607 Surf Avenue was finished last year and delivered another 376 units, according to the announcement. BFC worked on both phases.

In addition to Citi Community Capital’s loan, the Coney Island development has received nearly $700 million in investments, including more than $90 million in subsidy

from Mayor Eric Adams’s administration, $116 million in construction financing from the New York City Housing Development Corporation, and funding from the New York City Department of Housing Preservation and Development.

“Citi Community Capital is pleased to have been a part of the team that BFC Partners assembled, providing construction debt and long-term equity, that helped finance 1709 Surf Avenue,” Richard Gerwitz, a managing director at Citi, said in a statement.

BFC’s project isn’t the only new development going up on Coney Island’s Surf Avenue.

In February, the New York City Economic Development Corporation (EDC) issued a request for proposals to build a 500-unit project called Coney Island West on an 80,000-square-foot, city-owned site between West 21st and West 22nd streets, CO reported.

The EDC will select a developer for that project by the end of the year.

Mayor Adams also has plans to renovate the summer tourist hot spot’s Riegelmann Boardwalk and Abe Stark Sports Center, as well as update the neighborhood’s streets and sewers.—Isabelle Durso

Kushner Companies, PTM Seal $87M Loan From Corebridge for Miami’s 2000 Biscayne Kushner Companies and PTM Partners have locked in a fresh round of financing for 2000 Biscayne, the partners’ luxury apartment building in Miami’s Edgewater neighborhood, Commercial Observer has learned.

The developers just sealed an $87.3 million, eight-year loan from Corebridge Financial, closing 2000 Biscayne’s development and construction chapter with permanent, fixed-rate financing.

The financing was structured to be coterminous with the $52 million in debt on the building’s fee simple interest — which also was provided by Corebridge (a spinoff of AIG).

Together, the two components bring the total debt on the building to $139.3 million.

Walker & Dunlop’s ​​Aaron Appel, Jonathan Schwartz, Keith Kurland, Adam Schwartz, Michael Stepniewski, Jordan Casella, Christopher de Raet, Stanley Cayre and Dustin Stolly negotiated the financing, which retires the previous leasehold mortgage on the building that Valley National Bank provided in 2021.

“2000 Biscayne represents the highest standard for modern living in one of Miami’s most dynamic neighborhoods, combining exceptional design, premium finishes and unmatched amenities,” Laurent Morali, CEO of Kushner Companies, said. “This successful financing is a clear testament to the strength and quality of the asset, and we’re grateful to our friends at Corebridge for their trust and confidence.

CHRIS SORENSEN; COURTESY WALKER & DUNLOP (2)

COURTESY WARESPACE

BFC Partners Closes on $250M Construction Loan for Coney Island Housing Development

Laurent Morali (top), Michael Stepniewski (bottom) and 2000 Biscayne.

Thank you to the Walker & Dunlop team for their unwavering support and expertise through another great execution.”

PTM Partners CEO Michael Tillman said the refinancing is a testament to the project’s success. “The 2000 Biscayne development team’s meticulous attention to detail and design has realized itself in a brisk 75 percent lease-up in a very short period,” he said. “Not only does this demonstrate the demand for high quality assets but also shows the continued strength of the Miami rental market, particularly within Edgewater.”

Kushner and PTM delivered the 36-story, 420-unit apartment building in October 2024 and was designed by Kobi Karp Architecture.

Leasing launched in July 2024, and today

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the building is 75 percent leased, with amenities that include coworking spaces, community dining areas, a children’s play area and a dog park. (Disclosure: Kushner president Nicole Kushner Meyer is married to Observer Media owner Joseph Meyer.)

“2000 Biscayne delivers unmatched quality, convenience and lifestyle offerings, firmly establishing it as the leading multifamily property in the Miami market,” Stepniewski, senior director of New York capital markets at Walker & Dunlop, said in a statement. “Miami continues to see strong demand for well-located, high-quality housing, driven by a rapidly growing population and sustained economic expansion. We’re proud to have been part of this exceptional project and look forward to its continued success.”—C.C.

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| 19

Peapacking Heat Peapack Private Bank & Trust seized on an opportunity the regional banking crisis presented to add Signature Bank’s Joseph Fingerman and Andrew Corrado to its roster as its business expanded into New York City.

By Cathy Cunningham Photographs by Evelyn Freja

Joseph Fingerman.

ost people in finance remember where they were when they heard Silicon Valley Bank had collapsed. And, if you were in New York City, the failures of Signature Bank and First Republic Bank were likely even more palpable. Both were major players in financing the city’s commercial real estate over the years, but ultimately became the secondand fourth- largest bank failures, respectively, in U.S. history.

Signature Bank, in particular, had been a consistent, go-to lender in the five boroughs, and a top three multifamily lender.

At the helm of its lending activities was Joseph Fingerman — also the highest-profile, most visible member of the team. At the time of the bank’s demise, he and his team had accumulated a $33 billion commercial real estate loan book — executing $4 billion across 632 loans in 2021 alone — along with a reputation for being relationship lenders that borrowers could rely on, and trust.

When Signature Bank failed on March 12, 2023, CRE loans weren’t the cause of its demise. Rather, the fatal blows came from the bank’s $16.52 billion of cryptocurrency coupled with contagion from SVB’s failure, which kick-started a quick outflow of deposits.

“It was never in our minds that we would fail,” Fingerman said. “We were quite solvent when the FDIC seized us, so the thought of this happening was surreal.

In our opinion, it was a definite overreach of [the FDIC’s] authority, and we just couldn’t understand how this could be possible. The first thing you think about are your clients and employees and what to say to them.

Unfortunately it takes time to gain some clarity, especially during times of turmoil and unanswered questions.”

The bank run on Signature escalated on Thursday afternoon, March 9, and by Friday several members of the lending team, including Fingerman, were called in to review and prepare loans for pledging to the Federal Reserve. “We spent the weekend working tirelessly in the office, wrapping up around 3 p.m. Sunday before I went home to relax with my kids,” Fingerman said.

While he was watching the NCAA tournament with his family, news broke on CNBC that the bank had been seized, and Fingerman’s cellphone immediately lit up with messages. “It was a surreal moment,” he recalls. “By Monday, we were operating under an FDIC bridge bank, and a week later it was announced that only deposit operations were sold to NYCB/Flagstar, while the CRE and fund banking portfolios were retained by the FDIC. After 16 years [working at Signature] in CRE, it hit me hard that I wouldn’t be part of the acquiring bank’s future.”

There are many theories around what eventually led to the seizure, and Fingerman has his. “Texts and tweets can make a bank run a reality in minutes in this day and age,” he said. “In order to have a systemic failure

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you need two banks, and we had a somewhat similar business model to Silicon Valley Bank — so we were in the wrong place at the wrong time.”

First Republic was next. It may have been headquartered in San Francisco, but its loan book had heavy exposure to New York City real estate, adding to the void that Signature left behind. An over-reliance on uninsured deposits coupled with continued loss in depositor confidence was also key in First Republic’s demise on May 1, but so was its book of lowinterest mortgages, fatally impacted by a series of rate hikes that reduced the market value of those assets.

While the world watched in stunned silence as the banking crisis unfolded, wondering whether a more widespread run was next, for some, the institutions’ failures didn’t just open a window of opportunity — it took that window clean off its hinges.

“The opportunity when Signature and First Republic closed their doors was to run into New York City — not walk,” said Doug Kennedy, president and CEO of New Jerseyheadquartered Peapack Private Bank & Trust.

Indeed, opportunity came sprinting through the door, with Peapack having the ability to hire teams from both of the failed banks, notably two of Signature Bank’s most wellknown, respected players — Fingerman and Andrew Corrado.

In order to fully capture the opportunity left behind in New York, Peapack would also need a Manhattan location, and a plan to fill the immediate, abrupt and gaping regional bankshaped void.

“When Signature failed, people would call me and say, ‘Joe, you don’t understand what a loss it is to have Signature go out of the market,’ ” Fingerman said. “They’d say, ‘I’m sure it was a big loss to you, but it was a huge loss for the real estate community.’ I’m really excited to be able to bring that back at Peapack.”

They say you don’t know what you’ve got until it’s gone, and so Fingerman is also confident.

“There are two types of real estate people: those that are banking with Peapack, and ones that will be banking with Peapack,” Fingerman said. “Our goal is to put the Peapack brand in front of people, show them who we are, and continue to execute.”

104 years young If you’re Googling “Peapack” right now, you might not be alone. Although the bank has been around for more than a century, many outside of its home territory are unfamiliar with the New Jersey bank. (Fingerman said he often chats with his peers today, and only at the end of the conversation will they say, “Wait, where are you now?!”)

Kennedy describes Peapack as a “104-year-old startup” — one that he joined 12 years ago when the bank was the ripe old age of 92. Previously Peapack-Gladstone Bank, the company reorganized and combined its banking and wealth management divisions in 2024, rebranding as Peapack Private Bank & Trust.

When he joined Peapack in 2012, the bank had a great reputation around client service but wasn’t overly sophisticated on the lending side, Kennedy said. It was a $1 billion balance sheet bank with a $2 billion wealth management business.

Kennedy looked to other successful boutique organizations he thought Peapack could emulate — specifically the regional banks that had a single point of contact and a hyper-focus on client and borrower experience.

Oddly enough, Signature and First Republic were two of those banks.

“What they had in common was a single point of contact handling the transactional and operational needs as well as the lending, and doing it not only at a corporate level, but also on a personal level,” Kennedy said.

His team put together a 200-page document analyzing the two banks’ business models, how they were structured and how they paid their people, and began to adopt

a similar client- centric business model at Peapack in New Jersey. When Signature and First Republic vanished from the market starting in March 2023, Kennedy saw the chance to bring what he had been building across the Hudson River to Manhattan.

“I knew we had to run into the city and start a business that looked and felt like both of those banks in order to fill the massive void they had left,” Kennedy said, speaking from Peapack’s shiny new Manhattan offices at 300 Park Avenue. “I knew that the banks that were already here [in Manhattan], even the smaller ones, couldn’t fill that void because that high level of service wasn’t part of their business model, whereas it was already very much part of our DNA.” Not that this plan of action was quite as immediate as more timely concerns in the midst of the banking crisis.

“For the first two weeks [after Signature failed] I wanted to make sure that there wasn’t going to be a run on us, and that we weren’t going to fail,” Kennedy said. “Once I became certain it wasn’t going to happen, it was a run into New York City. We recruited a team, principally out of First Republic.

Six months later I called Andrew [Corrado] and said, ‘Andrew, I’m coming into New York City to start a business. Can you coach me on what I should do?’ He said, ‘It’s funny you called, because I’d be interested in joining you, and I have a whole team of other individuals who might be interested as well.’ ” Peapack hired 100 people in total from the two banks, the majority from Signature. There was just one rule as Kennedy went about putting his plan in motion: “We don’t hire jerks — strictly no assholes.”

‘We don’t hire jerks — strictly no assholes.’

‘A little like Van Halen’ Corrado, previously an executive vice president and head of commercial and private banking at Signature Bank, was working as a group director at Flagstar Bank when he got the call. Flagstar had acquired a large portion of Signature’s assets (and liabilities) post-failure.

“There wasn’t the ability to navigate the market as we once had,” Corrado said of his time at Flagstar. “Having interacted with Doug historically, and having the same, client-centric thought process, I felt that there could be a good match here.” He joined Peapack in March 2024, roughly a year after Signature failed.

Meanwhile, Fingerman had taken a role at a nonbank —A&E Real Estate’s lending arm —but his banking roots were calling.

“I felt like my highest and best use — to use an appraisal term — was back in a bank,” he said. “It was just a question of finding the right bank.”

Fingerman met with several banks before Peapack, and — for good reason — felt he was interviewing those banks just as much as they were interviewing him. “I wanted to know their headaches, and what I’d be getting myself into,” he said.

But Peapack, he already knew. The bank had been a formidable competitor of Signature’s for years in New Jersey. It had a large real estate portfolio, the two banks would often trade deals back and forth, and they had several clients in common. “It gave me comfort that they were able to produce a $2 billion- plus mortgage book and had a general idea of

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what was going on in commercial real estate — as not everyone does,” Fingerman said, adding that he felt Peapack was the best fit for him, given its culture, client focus and position in the market.

Further, Kennedy, Corrado and Fingerman had similar beginnings, having all worked at North Fork Bank at various times. When Fingerman was a young analyst at the bank, Kennedy was running the bank’s New Jersey operations and Corrado was running the Long Island region. When Capital One bought North Fork in November 2008, Fingerman left for Signature Bank.

“We eventually dragged Andrew to Signature [in March 2014],” Fingerman said. “We’d also tried to drag Doug to Signature over the years, and so what was I going to say to this [Peapack] offer? It feels a little like Van Halen — the band’s back together again.”

The Signature fallout — from the bank’s failure to the shedding of its staff to the bank’s loan portfolios auction process — had been the industry’s obsession and must-read news, and Fingerman’s moves were keenly watched.

Keeping a secret in New York City real estate is like trying to nail jelly to a wall, however, and Fingerman’s interview setting at Peapack didn’t help too much. “I was sitting in this glass fishbowl of a conference room with people I’d known for years walking by and texting me while I was still in the interview,” Fingerman recalls, laughing.

When he accepted Peapack’s job offer, he already had a plan to help build the brand.

“Peapack didn’t have a retail location in New York to garner deposits previously,” Fingerman said. “When I took the role, I thought I’d be able to either go after the existing clients that have loans with us for deposits or — over the next few years — replace that book with my existing clients. Now, I’m doing a little bit of both of those. We’re working to make our book more relationship-focused, where we can go after clients for deposits, wealth, cash management, home mortgages, whatever they need — and it’s been really well received by the New York marketplace.”

In March 2024, when Corrado joined Peapack, the bank’s headcount was around 500 people. A little over a year later, it’s risen to 670 and the bank has grown its staff by more than 30 percent. Peapack has a $6 billion loan book today, of which roughly $2.5 billion is commercial real estate loans in the New York metro area and New Jersey. Its primary clients are family offices that own around 10 properties, have been in the business for typically decades, and place importance on a personal touch — a dedicated person to speak with who can handle both their deposit and lending needs.

“With all the change in the landscape in the banking world, clients are yearning for what they had pre-2023, so we’re providing tailored solutions to each one of the clients,” Fingerman said. “On the commercial real estate side, we’re lending on multifamily, retail, industrial and mixed-use properties throughout the New York metro area. While we have the capacity to lend on a much higher number, we’re trying to keep the loans under $20 million.”

The end of the gun Many theories exist around what ultimately led to the untimely demise of the banks that failed in 2023. Kennedy, Corrado and Fingerman agree that a bank’s culture is key to its success, while pressure to feverishly grow can be a killer.

“I’ve never subscribed to ‘You have to close $300 million of loans per quarter,’ ” Fingerman said. “You have to find good business first, because I think when you’re given quotas, you end up making really bad decisions.”

In addition to its crypto book, and funding its activities through largely uninsured deposits, Signature aggressively grew from $50.6 billion to $110 billion in assets between 2019 and 2022 — without adequate risk management practices in place to match that growth, according to a FDIC report.

Kennedy, a member of the New York Fed’s board of

COMMERCIALOBSERVER.COM | JULY 8, 2025 | 21

POWER PLAYER

MAKING THE BAND: (From left) Andrew Corrado, Doug Kennedy and Joseph Fingerman at Peapack’s 300 Park Avenue offices.

directors since 2020, carefully studied the FDIC postmortems on SVB, Signature and First Republic.

“All three of those banks were trying to fuel a growth story,” Kennedy said. “What they shared in common in their culture —which I think is wrong —was to grow at any cost.”

It’s a mindset that Peapack is steering well clear of.

“The lesson learned, and what we’ll not do, is drive this company for a number,” Kennedy said. “That’s not our preamble. I don’t care if we grow or don’t grow, let’s just go out and get the client. Let’s please them like we can like nobody’s business. Let’s get paid fairly for what it is that we do, and whatever the size that comes out of that, that’s fine.”

The big takeaway for Kennedy is “don’t focus on growth, focus on the client, focus on executing superbly for that client, and let the rest of it all take care of itself,” he said. “If you do that with really good people — who are not assholes and work collaboratively — the growth and the shareholders, all of that will follow. And this is a deep enough pond in the New York metro area, with $2.8 trillion in deposits. That’s the fuel that we need to lend, and just crumbs in this market is enough to make Peapack successful.”

Banking on Manhattan To get those deposits and truly fill the void left by Signature’s exit, Peapack needed a location and retail branch in New York City. Kennedy had managed teams in New York City during his time at Capital One, and he knew Midtown was where Peapack had to be. In January 2024, it announced plans to open at Tishman Speyer’s 300 Park Avenue, officially opening its doors in March 2025.

The location houses 6,000 square feet for its private banking center and an additional 18,000 feet of office space on the 13th floor.

“We’re not just a New Jersey bank opening up a branch in Manhattan,” Kennedy said. “This is a transformational

22 | JULY 8, 2025 | COMMERCIAL OBSERVER

change, and we’re here for the long haul.”

Kennedy views the bank’s new retail location — which includes a quarter-million-dollar horse statue in the lobby window that’s illuminated at night — as an announcement of sorts. It’s certainly caught the eyes of some of Peapack’s competitors, who have been taking selfies with the horse as they pass and sending them to Fingerman.

“It doesn’t say typical retail bank,” Kennedy said.

“It’s really there as a billboard, a showplace, a sign of our commitment.”

The bank may not be hyperfocused on growth, but it’s happening anyway. Peapack thought it could bring in around $400 million in deposits in 2024 through Corrado and the New York teams they’d hired. It ended the year at $1.2 billion.

As it expands its business in New York, the team is focused on building out Peapack’s business diligently, but in partnership with clients.

“The client experience is changing. We’re saying to clients, ‘If you want to use that side of the balance sheet and be borrowers, we would like to have some deposits from you,’ ” Fingerman said. “My core group in New York, together with the legacy team in New Jersey, basically went through both books, Signature and legacy Peapack, and said, ‘These are the clients that we want to go after, and these are the clients that are perfectly fine. But if they’re more transactional and not willing to give us deposits, we would like to either convert them to a client, or be paid off.’

And, so, we’ve been going after the city’s top borrowers and saying, ‘Hey, we’re Peapack and this is what we could do for you. Give us a shot.’ ” Most of those conversations are going well, Fingerman said: “Most people say, ‘It’s so good to hear from you,’ because they have personal relationships with me, with Andrew, with the staff that we brought on, with Peapack’s legacy staff.”

As such, Peapack’s pipeline is shaping up nicely. “It’s being

carefully managed to make sure that we’re getting the right loans, the right deposits, the right ratios,” Fingerman said.

Given that the run on regional banks a couple of years ago scared the bejeesus out of most, Peapack is focused on giving clients plenty of reassurance that their deposits are safe.

“We made the strategic move when we came into New York to lead the discussion and take any angst off the table around ‘Who is Peapack and how stable are you?’ ” Corrado said. “So, even though our balance sheet and capital ratios are some of the highest in the country and we’re one of two or three banks in the country that have a Moody’s investment-grade rating, our clients need to be able to rest at night and go to sleep knowing that the monies that they’ve invested are safe.”

As such, Peapack leads with a product called ICS — essentially a reciprocal arrangement where deposits are held with other FDIC banks across the country in order to pass through the FDIC coverage.

“Customers aren’t capped at $250,000 [in FDIC insurance coverage] — there’s up to, I think, $220 million that they could be covered for in today’s environment, based upon the number of participants across the country,” Corrado said. “It’s a cost to us, but we bear that cost because we felt it was the right thing to do from a business perspective, to give those clients peace of mind, and, you know, as part of our entree into New York.”

As Peapack works to fill the lending void Signature and First Republic left behind, Fingerman knows he has a long road ahead as the bank establishes a longer track record and more familiarity in New York, but he’s just getting started.

“I was at Signature for 16 years, and that platform wasn’t built overnight,” he said. “It was constant work and we went through several market highs and lows, but we were there for our clients. We want to have that same lender-borrower relationship here.”

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FINANCE

Chart Finance Tracking Delinquency Trends From the GFC to Q1 2025

By Mike Haas At CRED iQ, our mission is to provide commercial real estate professionals with the data and insights needed to navigate an ever-evolving market. This week, our research team took a deep dive into loan delinquency trends, expanding our lens from the Global Financial Crisis (GFC) to the present day.

CREDIQ By focusing on FDIC-insured commercial banking and savings institutions, which includes community banks, we’ve uncovered critical patterns in CRE loan performance, offering a clearer perspective on today’s marketplace.

Two key segments and what they tell us Our analysis spans from March 2007 to March 2025, shifting focus from securitized and agency markets to FDIC-insured institutions. We examined two key segments: multifamily properties and “core” CRE, which includes office, retail, hotel, industrial, self-storage and other property types.

This approach builds on our earlier research, providing a comprehensive view of delinquency trends and their implications for the CRE industry.

Key findings from Q1 2025 Our analysis revealed several trends in loan performance: • Core CRE lending growth slows: The long-term average annual growth rate for core CRE lending balances is 4.55 percent. The first quarter of 2025, however, saw an annualized growth rate of just 1.22 percent, the lowest since 2012, signaling a cautious lending environment.

• Core CRE delinquencies rise: Total delinquencies across core property types reached $31.4 billion in Q1 2025, equating to a 1.7 percent overall delinquency rate. Of this, $25.1 billion are loans 90-plus days delinquent, while $6.3 billion are 30 to 89 days delinquent.

• Net losses decline for core CRE: Net losses in the core sector totaled $3.9 billion in Q1 2025, down from $5.9 billion in the prior quarter, suggesting some stabilization.

• Multifamily losses peak: Multifamily properties reported net losses of $767 million in Q1 2025, the highest quarterly total

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since 2012, highlighting growing challenges in this sector.

Comparing March 2020 to March 2025 To contextualize recent trends, we compared delinquency metrics from March 2020 to March 2025: • Multifamily delinquencies surge: Delinquent loan balances in the multifamily sector grew from $1.5 billion (0.3 percent delinquency rate) in 2020 to $9.4 billion (1.5 percent) in 2025. Loans 90-plus days delinquent increased dramatically, from $560 million to $6.71 billion.

• Core CRE delinquencies double: Delinquent loan balances in the core segment rose from $15.4 billion (1 percent) in 2020 to $31.4 billion (1.7 percent) in 2025, with 90-plus day delinquencies climbing from $9.7 billion to $25.1 billion.

These shifts underscore the increasing pressures on CRE loan performance, particularly in the multifamily sector, where rising delinquencies and losses signal heightened risk.

Mike Haas is the founder and CEO of CRED iQ.

COMMERCIALOBSERVER.COM | JULY 8, 2025 | 23

FEATURE

More banks are tapping the equity in their branch locations

alk about branching out.

SouthState Bank grabbed headlines earlier this year when it agreed to a saleleaseback of 165 of its branches across the Southeast for $467 million, and it’s not alone. In a structure typically more common for industrial and logistics properties, banks are increasingly offloading their branches to third parties, and Florida-based SouthState executed the biggest such deal in recent memory.

“We’ve looked at this type of transaction several times over the years, and felt like the stars aligned now,” John Corbett, CEO of SouthState, said during an April earnings call.

When it comes to financial institutions tapping the equity locked up in their branch networks, the stars are aligning for others, too. According to an analysis by SLB Capital Advisors of New York, the pace of sale-leasebacks of bank branches has accelerated. SouthState’s deal alone outpaced the entire volume of bank sale-leasebacks in 2023 and 2024 combined.

Beyond SouthState, which is headquartered in Winter Haven, Fla., and has $65 billion in assets, Harborstone Credit Union of Tacoma, Wash., also this year closed on a sale-leaseback totaling $79.3 million. SLB Capital Advisors points to half a dozen other institutions around the country that have executed smaller deals.

So, why the sudden popularity of sale-leasebacks?

The trend is driven by a combination of rising interest rates and midsize banks’ need for capital, said Stewart Riggs, principal at SLB Capital Advisors.

“It is a very attractive source of capital for banks and credit unions,” Riggs told Commercial Observer.

“They can execute a sale-leaseback and put cash back on the balance sheet. The whole banking system is predicated on taking one dollar and lending out five — but you need the one dollar.”

Bankers have shifted their mindset around property ownership. While the best branches once were seen as prized possessions, bankers have begun to view physical locations differently, Riggs said.

“Bricks and sticks is not what drives the profitability of a branch,” he said. “It’s the people inside the location.”

Other companies with retail locations long have done sale-leasebacks, and bankers are coming around to the benefits of an asset-light strategy.

“They need real estate, but they don’t need to own it,” said Tzvi Rokeach, partner at New York law firm Herbert Smith Freehills Kramer. “In my mind, this is the perfect asset for a sale-leaseback transaction. I would not be surprised if there were more.”

Another factor driving deals: Despite the fading importance of bank branches for everyday transactions, the locations remain in favor among investors, said Andrew Sandquist, vice chairman at Newmark in Chicago.

“Today, bank branches are quite valuable,”

24 | JULY 8, 2025 | COMMERCIAL OBSERVER

Sandquist said. “Bank branches are viewed favorably by investors, so the timing is good for banks to do these transactions.”

This may be counterintuitive to those who do all their banking online today and can’t remember the last time they set foot inside a bank, but reports of the bank branch’s death seem to have been exaggerated. U.S. financial institutions operated nearly 69,000 physical locations as of 2024, according to the Federal Deposit Insurance Corporation. That’s down from the all-time high of almost 83,000 in 2012 — but it still represents plenty of pieces of real estate owned by banks.

In the case of SouthState, its sale-leaseback portfolio spans 1.18 million square feet across Alabama, Georgia, Florida, North Carolina, South Carolina and Virginia.

The buyer was Blue Owl Capital, a New York-based company that’s a frequent acquirer of sale-leaseback

‘Bricks and sticks is not what drives the profitability of a branch.’ properties. SouthState signed 15-year, triple-net leases that call for annual rent increases of 2 percent. JLL represented the seller in the transaction.

Corbett, SouthState’s CEO, told analysts that he viewed the transaction as “harvesting capital.”

“When we ran the numbers, the cost of capital was more attractive than other sources of capital,” Corbett said. “So, really, it’s more of a capital management exercise that will give us flexibility going forward. And the other thing is as we’ve looked at it, one of the things you want to look at is the spread of the cap rate versus the risk-free rate, and it was pretty narrow. So we felt like this was a good opportunity to do it.”

SouthState’s sale-leaseback came shortly after the bank closed on the $2 billion acquisition of Independent Bank Group, which operated branches in Texas and Colorado. But banks can use the proceeds for a variety of reasons, including making upgrades to their technology platforms. Smaller banks are in a race to match the digital offerings of much larger rivals.

“All of the banks are under a lot of pressure to have the best, fastest digital technology for customers,” Sandquist said.

Another use: absorbing losses from securities that went down in value as the Federal Reserve sharply raised interest rates in 2022 and 2023.

That was the case at Fulton Bank of Lancaster, Pa., which in 2024 sold 40 branches in Delaware, Maryland, New Jersey and Pennsylvania — also to Blue Owl Capital — for $55.4 million, at a 7.9 percent cap rate. The bank used the proceeds to offset the costs of selling underwater securities.

“Sometimes it’s a defensive play to offset losses somewhere else,” said Paul Davis, founder and CEO of Bank Slate, a consulting firm based in Greensboro, N.C. While Blue Owl is a major player in buying up bank branches, it’s not the only acquirer. Another is MountainSeed Real Estate Services of Atlanta. It was the buyer of the Harborstone Credit Union branches.

MountainSeed also paid $25.7 million for nine locations owned by Plumas Bank, a $1.6 billion institution headquartered in Quincy, Calif., and $17.6 million for four branches owned by MVB Bank of Fairmont., W. Va. Sale-leasebacks come with some costs. For instance, while Fulton Bank pulled $55 million out of its branches, it paid $4.4 million in rent to occupy the 40 branches in the first year of the sale-leaseback deal. That sum is set to go up by 2.25 percent a year.

What’s more, banks typically sign 15-year leases on the branches, meaning they’re unable to close the locations as readily as they could if they owned the real estate.

“There’s maybe a little less flexibility there if they want to rightsize some of these branches,” Davis said.

However, banks typically sell only their highestperforming branches, those with the most deposits and in desirable locations.

“The vast majority of the time, the bank is not going to do a sale-leaseback on a location it plans to close in the long term. And investors don’t want to buy a location that they think could be vacated in the next 10 to 15 years,” Davis said. “The acquirers don’t enter into these transactions until they’ve had lengthy discussions and assurances that the banks are going to be in the branches for the duration of the lease.”

For bankers in love with their best sites, saleleasebacks let them lock up locations for up to 40 years, said Griffin Pitcher, executive vice president at CBRE. A bank could do a sale-leaseback for 20 years, and add four five-year options.

“Sale-leasebacks are a pretty attractive way to take out capital without taking on added debt,” Pitcher said.

One twist in the sale-leaseback trend is that it’s unlikely that megabanks such as Chase, Bank of America and Wells Fargo will participate. Their massive customer bases mean they have abundant capital.

“You don’t see the big guys doing sale-leaseback transactions,” Davis said. “It’s certainly been an instrument of larger community banks and smaller regional banks.”

PHOTOS: ADOBE STOCK

By Jeff Ostrowski

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FEATURE

It’s decision time for proptech venture capitalists — and they’re taking their time

By Philip Russo

26 | JULY 8, 2025 | COMMERCIAL OBSERVER

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FEATURE

‘2025 year-to-date has been extremely slow. Very small deals are happening and very few of them.’ aising money for a proptech investment fund is difficult enough. The necessity of deploying those funds within a certain time frame can be equally daunting.

That is especially true these days, as economic and other macro factors provoking uncertainty dominate the news, including the trade war that President Donald Trump kicked off with his April 2 “Liberation Day” tariff announcement. Venture capitalists (VCs) and other investors, then, see the investment road as alternating wildly between rugged and somewhat smooth as they seek profits from proptech startups.

“I’ve seen deployment speed up this year,” said Zach Aarons, co-founder and general partner at MetaProp, a Manhattan-based early-stage proptech VC firm. “I think it’s still too early to say whether things have slowed down since ‘Liberation Day’ or not. There’s usually a lag in the venture markets relative to the public markets.

We had this huge drawdown in the public markets. Now the public markets are positive for the year again. So I don’t know if there’s going to be a slowdown over the summer in the venture markets. It doesn’t seem like it.”

According to investment banking firm Houlihan Lokey’s 2024 PropTech Year in Review, issued in March 2025, the proptech market remains strong, “with about $4.3 billion in growth equity and debt financing and 90 M&A [mergers and acquisitions] transactions in 2024. Houlihan Lokey is optimistic about growth in the proptech market in 2025 as business momentum improves and the need for consolidation across the category continues.” (The firm has not yet published proptech funding numbers for 2025.)

“Venture capital investment in the first quarter of 2025 reached $2.06 billion across proptech and adjacent sectors, with January alone contributing $902 million,” according to the Center for Real Estate Technology and Innovation (CRETI), a major proptech tracker.

An apparent reopening of the window for initial public offerings “is super exciting,” Aarons added, pointing to the successful IPO of commercial and residential trades company ServiceTitan in the fourth quarter of 2024 as a prime example of what he thinks will continue. “ServiceTitan has done really well. I think it’s trading at about a 20 percent higher IPO price, and its IPO price was a little bit higher than its last valuation in the private markets.”

A number of recent successful IPOs in adjacent sectors such as fintech and healthtech also bode well for the proptech industry’s investment market, said Aarons.

“We’re seeing opportunity,” he said. “We’re not deploying because we have to. We’re deploying because we’re seeing interesting deals. Our strategy is to stay diversified, keep the companies that we invest in, and have them use AI whenever they can as it relates to customer service and to coding, and figure out how to grow more sustainably. And, for us, it’s about not necessarily investing in a bunch of

businesses that rely on real estate transaction activity to pick up for their revenue to grow.”

MetaProp’s investment strategy — which has included about 10 deals to date, some with other proptech and generalist VCs as well as family office funds — isn’t an outlier, Aarons said. “I would love to say it’s unique compared to competitors, but a lot of our competitors are co-investing in the deals with us.”

The current proptech funding scene is somewhat opaque, Blake Owens, founder and CEO of Agrippa, an AI-powered, broker-free platform connecting commercial real estate capital seekers and providers, said in an email.

With the recent launch of Agrippa sister company Augustus, a private investment qualified opportunity fund, Owens now finds himself surveying the proptech funding scene from the rare position of founder and investor.

“The true velocity of deployment is difficult to quantify, but it is undeniably slow,” said Owens.

“Higher interest rates, constrained liquidity, geopolitical tensions and legislative uncertainty have pushed many investors into a wait-and-see mode.

That said, capital isn’t frozen, it’s just more selective. Forward-thinking investors with longer time horizons are beginning to look beyond present turbulence, capitalizing on asymmetric opportunities created by the current drawdown.

“Anecdotally, I’m seeing more momentum from non-VC/[private equity] investors who aren’t bound by rigid fund structures. In both proptech and direct CRE investments, institutional VC/PE investors are now placing more hurdles just to reach a term sheet.

As a result, I expect more founders and operators to pursue alternative capital pathways.”

Another founder — Janine Steiner Jovanovic, CEO of Dallas-based LeaseLock, an insurtech company for rental housing — is skeptical of current investor fund deployment regardless of limited partner pressures.

Although LeaseLock is not in fundraising mode, Jovanovic said she keeps an ear and an eye on the proptech investor ecosystem.

“If you look at what’s happened over the last few years, the volume of deals and average deal size has declined dramatically,” she said. “From 2020 to 2023 there was a slight uptick, and from 2023 to 2024. But 2025 year-to-date has been extremely slow. Very small deals are happening and very few of them.”

She does allow that there is much more interest in funding the insurance sector, where her company at least partially resides. As for venture capital acceleration overall in proptech, however, “I haven’t seen it yet. If that activity translates into something that we can witness and measure, then that would be great.

We’re all excited about that possibility. So it’s encouraging to hear that VCs are more active and that they believe there’s going to be more IPOs this year.”

From Jovanovic’s perspective, she is expecting a negative impact on some proptech companies.

“What you’re going to see is potentially some

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failures for proptech companies that haven’t been funded well enough and can’t get funding that’s affordable or reasonable right now,” she said. “They might not survive 2025 simply because not everybody planned for this. I’m seeing a lot of struggling startups that might not survive the year.”

However, Jovanovic also said that she is seeing private equity firms creating funds to write smaller checks more applicable to proptech. “That’s interesting to me, because collaborating with a PE firm is very different from a VC, and the opportunity to do something on a bigger scale with a company like Blackstone is, I think, unique. I’m encouraged and excited to see that’s a possibility in the future.”

Such a future might include LeaseLock, she said.

“We have some plans for diversification at the right time,” Jovanovic said. “We’re planning to do some consolidation ourselves, and finding the right partner who has the appetite to write the right size check is important. For us, it would probably be somewhere between a VC and a PE, unless we find there are PE firms now that seem to be inclined to write a somewhat smaller check. And, when I say smaller, I mean $100 million.”

The banking sector isn’t usually a big player in proptech startup funding, but John Huber, national lead for venture coverage at Wells Fargo Technology Banking, sees opportunity through the overall macro murkiness of tech investment.

“We have seen a steady decline in both venture capital and private equity investment activity over the past eight quarters since a peak in Q1 2023,” Huber said in an email. “Outside of AI, investment activity in most proptech sectors has been muted, as economic uncertainty and a somewhat tepid exit market has kept investors on the sidelines.”

Macroeconomic fluctuations are affecting proptech “a lot!” Huber said. “Real property has always shown elevated sensitivity to macro conditions, and we are seeing that playing out now in real time, most notably in interest rates, which directly impact borrowing costs and property values. In parallel, current market uncertainty is prompting investors to be more selective and deliberate in business risk evaluation. These factors impact all asset classes, and proptech is no exception.”

Despite such obstacles, Huber sees some areas of upside in deploying capital to proptech.

“One trend we are noting is activity pick up within PE, family office and private capital funds that have activated in a significant way to support the infrastructure needs around energy transition. This is a large asset play that requires significant capital deployment, generating interest from both investment-driven and enviro-conscious communities.

“And we see a lot of enthusiasm around AI — especially in support of compliance improvement, space optimization and business transaction automation. We are also seeing enthusiasm around fintech integration, including digital escrow and mortgage automation, as well as sustainability and energy infrastructure, especially in data center buildouts.”

COMMERCIALOBSERVER.COM | JULY 8, 2025 | 27

FINANCE

The Takeaway y Data courtesy of

The number of mortgages filed with the New York City Department of Finance inched up slightly in May to 730 loans, a 2.24 percent increase from April’s 714. Financings for hotel properties saw the biggest monthly gain at 42.86 percent, while multifamily deals jumped by 20.59 percent. Transactions for health care and vacant assets were largely flat month-over-month, while industrial and office saw the biggest monthly dips of the major property sectors at 25 percent and 23.81 percent, respectively. Mixed-use retail properties experienced a 9.22 percent monthover-month drop with 187 loans in May.

Refinances vs. Purchases Refinances in New York City far outpaced purchases in May.

513 REFINANCES

APR. MAY.

491

PURCHASES

MAY.

239 0

100

200

300

400

500

600

Total Sales by Borough NYC investment sales rose in the Bronx and Queens but fell in Manhattan and Brooklyn. (Staten Island is not tracked.)

ALL

MANHATTAN

BRONX

BROOKLYN

QUEENS

344 334

APR. MAY.

69

APR.

40

MAY.

BANK

APR.

BANK

MAY.

J.P. Morgan Chase

65

J.P. Morgan Chase

110

Cathay Bank

21

Prudential

37

Citibank

20

Cathay Bank

22

Ridgewood Savings Bank

12

NCB

19

NCB

12

Bank Of Montreal

14

Metropolitan Commercial Bank

11

TD Bank

13

Greystone

10

East West Bank

13

Habib American Bank

10

Broadview Capital

11

Flushing Bank

9

Flushing Bank

10

Ponce Bank

8

Valley Bank

9

TD Bank

8

CPC

8

Customers Bank

8

Citibank

8

Webster Bank

8

G C H

The most active ZIP codes for May were largely clustered in Brooklyn and the Bronx.

ZIP CODE

APR.

ZIP CODE

MAY.

11226

25

A

11237

22

11201

24

B

11211

20

11222

22

C

10458

20

11211

19

D

11101

19

11216

15

E

11220

16

11385

13

F

11226

15

10022

13

G

10467

14

11212

13

H

10453

13

I

10029

13

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Castellan Real Estate Partners provided a $25 million construction loan for a condo development at 179 North 10th Street in Williamsburg.

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HOME TRUTHS

On New York Housing: Old Problems, New Mayors and a Need for Unity With new leadership taking the helm affordable housing efforts in New York. in nearly every major city across New More than 1 million New Yorkers in York and impending cuts on the federal Manhattan alone rely on federal rental level threatening critical housing proassistance, including $2.1 billion in grams, voters have a crucial role to play in Section 8 vouchers. this election cycle. Every vote is a powerA full 70 percent of the New York City ful tool to demand bold action, hold leadHousing Authority’s operating buders accountable, and ensure get depends on this federal that the production and presfunding. HUD has already ervation of affordable housing announced it will end remains a top priority.

Emergency Housing Voucher We are facing a housing Assistance Payment funds, emergency of historic proporputting 5,500 New York City tions, and the political moment households at risk of losing is as perilous as it is pivotal. The critical support by 2026. If we decisions made by local leadcontinue at this pace, HUD’s ers in the coming months will local operations could disapJolie Milstein shape the trajectory of affordpear altogether, a development able housing for years to come, but they that would be catastrophic for thousands cannot act alone. State and federal support of families. must match the urgency of the moment.

These looming cuts come as the costs of The federal government’s increasingly building and operating affordable housing hostile posture toward housing is soundcontinue to skyrocket driven by inflation, ing alarm bells. tariffs, labor shortages and surging insurProposed staffing cuts at the U.S. ance premiums. Unlike market-rate develDepartment of Housing and Urban opers, affordable housing providers cannot Development (HUD), including a stagpass along these costs to tenants. The result gering reduction of up to 84 percent to is a growing reliance on subsidies that are the Office of Community Planning and simultaneously under assault, creating a Development, would be devastating to chilling effect across the entire development

community. The lack of predictability in funding, combined with increasingly constrained tools for building affordable homes, leaves many would-be projects stuck in limbo, or never launched at all.

Yet, there is an opportunity — if we seize it. With new mayors poised to take office in cities across the state, New York is at a major political inflection point. Voters are demanding leadership that can finally get ahead of the housing affordability crisis. In campaigns statewide, candidates are pledging to build hundreds of thousands of new homes, to reform zoning laws, and to invest in local solutions. These commitments are encouraging, and they show that housing is rightly at the forefront of our political discourse. But promises are not plans, and pledges alone are not policy.

Where candidates have held public office, voters should scrutinize their history carefully, especially their track record on affordable housing creation and preservation. It’s not enough to campaign on lofty ideals — we need evidence that leaders will follow through. When elected, these new mayors must implement real, data-driven solutions that prioritize housing affordability. They must also be held accountable if they fail to deliver.

At the state level, New York must do more to protect and expand its role as a bulwark against federal retreat. That means fully funding vital programs, increasing allocations to preservation efforts, and using every available policy lever such as zoning, land use reforms, and maximizing tax incentives to make it easier and faster to build affordable homes.

Rejecting federal spending cuts and staff reductions is a start. Investing new and significant resources to increase the supply of affordable housing and keep renters stably housed must follow.

Meanwhile, we must make it clear to Washington: Walking away from housing is not an option. Proposed cuts to HUD are an abandonment of our most vulnerable residents and a direct threat to decades of bipartisan progress. If federal leaders continue down this path, it will be up to state and local governments to step into the void with limited tools and even fewer dollars.

This moment demands courage: from voters, from candidates, from every level of government. We cannot afford to let up.

Jolie Milstein is immediate past president and CEO of the New York State Association for Affordable Housing.

GREEN LIGHT

Climate Change Isn’t Static. Building Certifications Shouldn’t Be Either.

The launch of Leadership in Energy and Environmental Design (LEED) certification 25 years ago changed the real estate world. For the first time, the industry had a structured framework for making buildings healthier and more efficient. Energy models, daylighting studies, material health declarations, efficient water systems, and responsible siting were all part of the certification process. It made sustainability visible and measurable in a way that investors, municipalities and tenants could rally behind.

But the world has changed again.

Today, a new force is rising that threatens to leave even the best-intentioned green buildings behind: artificial intelligence. Not as a bolt-on tool or a fancy gadget, but as the new nervous system of sustainable real estate itself. And, if LEED does not evolve fast, it risks becoming a museum of good intentions while the real innovation races ahead.

Buildings are no longer passive structures. They are becoming intelligent, adaptive organisms that sense, learn and optimize every minute. Smart buildings today adjust lighting, heating, ventilation and cooling based on real-time occupancy patterns, weather forecasts and energy market conditions. They predict mechanical failures before they occur. They minimize

carbon emissions hour by hour, not just year by year.

This is not theoretical. It is happening right now. Yet, in LEED’s current structure, newer innovations are often crammed into optional innovation credits. They are treated as bonus features rather than essential elements of sustainable building performance.

This is LEED’s blind spot.

LEED was built for a world where design dictated destiny. If you installed thick insulation, low VOC materials and efficient systems, your building was considered sustainable almost by default.

Static decisions were Suhail Y. Tayeb. assumed to deliver static benefits over time.

Today, performance is dynamic. It shifts with tenant behavior, weather and grid volatility. Two identical buildings could earn platinum plaques at commissioning, but a decade later one may waste energy while the other thrives, all because one adapted and the other didn’t. Static checklists cannot capture dynamic reality.

A building that optimizes and reduces its footprint over time is more sustainable than

one that was certified but left unmonitored.

AI is already enabling this shift. HVAC systems now anticipate heat waves and precool during off-peak hours. Lighting adjusts autonomously based on daylight and occupancy. Water systems detect leaks early and prevent waste. Sustainability is no longer a static design feature. It is an active, operational mindset that evolves daily. This is the future of real estate, and it demands a new kind of recognition.

Imagine if adaptive optimization became a core requirement.

Adaptive optimization credits would become mandatory, rewarding systems Amy Myers Jaffe. capable of adjusting building performance based on live operational data. Operational resilience would be scored based on actual real-world energy and emissions performance, not design projections. Life cycle carbon accounting would track a building’s environmental impact across decades of operation, not just initially modeled assumptions. Ethical data use standards would ensure that building intelligence is leveraged responsibly without compromising occupant privacy.

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Continuous commissioning and dynamic improvement would be recognized and rewarded, encouraging buildings to evolve, learn and improve as conditions change.

This would transform LEED from a static design trophy into a living certification that matures with the building itself. Climate change is not static, after all. Temperatures are rising. Weather systems are destabilizing. Energy grids are stressed. A single moment of compliance will not suffice.

If LEED, WELL, Green Globes and similar frameworks want to stay relevant, they must pivot from compliance checklists to continuous operational excellence. Otherwise, a new generation of smart green certifications will emerge, focused not just on design intent but on actual, provable resilience over decades.

Sustainability is no longer just built. It is operated. It is optimized and lived. And, if we want a real estate sector that helps lead the way to a resilient future, then it is time for our certification systems to evolve at the same pace as the intelligent buildings they hope to recognize.

Suhail Y. Tayeb is a clinical assistant professor at New York University’s Schack Institute of Real Estate. Amy Myers Jaffe is director of the Energy, Climate Justice and Sustainability Lab at NYU’s School of Professional Studies.

COMMERCIALOBSERVER.COM | JULY 8, 2025 | 29

FEATURE

By Isabelle Durso

Uncertainty has infected the market for new industrial space as lease renewals and sublease availability both jump t’s hard to make a warehouse these days if you can’t make a decision.

The 90-day pause on the Trump administration’s sweeping global tariffs was set to expire July 9 as of press time. And while it’s going to be a scramble for nearly every asset class, the country’s industrial market has already seen a significant slowdown in construction starts and leasing decisions.

Industrial construction starts in the U.S. are on pace in 2025 to hit their lowest level this decade, given the 86.9 million square feet in starts through May of this year, according to a new report from data tracker CommercialCafe.

Developers started on 116.1 million square feet during the same time period in 2024 and on 158.3 million feet in 2023.

The peak for this decade was in 2022 with 228.5 million square feet through May that year.

Tariffs are not the whole story. Some 342.3 million square

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feet were under construction nationally as of May, while only 117.8 million square feet have been delivered so far this year. That’s compared to the roughly 650 million square feet delivered in 2023, the report found.

The drop in construction starts is largely a result of companies catching up with the overabundance, or “glut,” of new construction delivered during the COVID-19 pandemic, when developers built in a frenzy to keep up with demand, according to Gregory Healy, head of industrial services for North America at Savills.

“It’s a trifecta of challenges right now,” Healy said. “We’re seeing volatility, inflation and capital constraints impacting construction starts. … There was a lot of overbuilding [during the pandemic] because the demand for industrial was infinite. And now we’re trying to get back into equilibrium with the market for supply and demand.”

While the pullback in new industrial construction was

expected this year, uncertainty around the tariffs hasn’t helped the situation, with increased material costs and delayed decision-making slowing the rate at which newly delivered supply is being absorbed.

“The uncertainty caused by [the tariffs] right now is worse than the effects of the actual tariffs,” said Peter Kolaczynski, associate director at CommercialEdge and an author of the CommercialCafe report. “It’s always a question of how much that’s deterring the decisionmakers from making these decisions versus just having a policy and sticking to a policy.”

Shrinking supply might be good for landlords looking to fill their industrial spaces, but when they ultimately have to build again, they’ll likely face increased material costs from Trump’s 50 percent tariff on imported steel. U.S. construction firms imported $32 billion in steel in 2024, and the demand for steel far exceeds the current supply, according

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to CommercialCafe’s report.

Developers and contractors will be most severely impacted by the tariff on imports from China, which is the world’s largest steel producer and exporter, and by the tariff on imports from Canada, which exported approximately $7.1 billion worth of steel to the U.S. in 2024, according to the Canadian Chamber of Commerce.

But it’s not just material prices industrial developers are concerned about — it’s land prices, too.

“We’ve seen a lot of these surges before, and we seem to adjust to them,” David Knee, vice chairman at JLL, said.

“Even with the commodity prices, the steel and the oil and those things going into building materials, the other piece of it is land. So your total building cost is not just one element or another.

“And I think you’re seeing companies even look at different types of building materials,” Knee added. “I think there are architects and engineers looking very hard at utilizing wood versus steel. So you might see that become a trend in the next few years, if that proves to be sustainable.”

The slowdown in construction starts also means fewer options for tenants, who are often hesitant to commit to long-term leases or build their own facilities until solid trade policies are formed.

Master Wall — which manufactures exterior insulation finishing systems, air and water barriers, coatings and adhesives — is one of those tenants dealing with the uncertainty.

A few years ago, Master Wall moved its production facility out of the Atlanta metro area to build a new plant and office in Columbus, Ga., where it rezoned a property and met with an architect to discuss financial needs, Steve Smithwick, founder and CEO of Master Wall, said.

“We were more than surprised at the cost of new construction,” Smithwick said in a statement. “Even though we are in the manufacturing business to make wall components, the cost exceeded our expectations. Bottom line, with the interest rate being in the 5 to 7 percent range, we abandoned the goal of building a new manufacturing and home office facility. Since then, we have been searching for existing buildings that could meet our needs.”

And when it comes to leasing for Master Wall — which rents space in Florida, Pennsylvania, Texas, Utah and Georgia — Smithwick said he noticed a “substantial increase” in rents, with rent on its Florida lease increasing 90 percent over the previous five-year lease rate.

Still, it seems most industrial tenants are going the renewal route, as the renewal market has been “pretty healthy” lately, Knee said.

One landlord seeing that renewal trend is private equity firm Redfearn Capital, which specializes in the acquisition, development and management of industrial properties across the Southeast, specifically bulk distribution centers, warehouses and manufacturing facilities. Its more than 250 industrial tenants include Beacon Roofing Supply, ABC Supply, FedEx, Sherwin-Williams and Goodman Manufacturing.

“From what we’ve seen with our own tenants, any time there’s uncertainty, especially with something that impacts pricing and profitability, you’re seeing a lot of these tenants just pause decision-making, which makes it really hard for developers or landlords to project what the next six months or 12 months is going to look like,” said Alex Redfearn, CEO and founder of Redfearn Capital.

“Most tenants are just renewing and staying in place rather than relocating and taking a big jump in their rent expenses at this point,” Redfearn added. “So it’s something I think we’ll continue to see until there’s some final shakeout on the tariffs.”

In fact, the national industrial vacancy rate rose to 8.5 percent in May, up 290 basis points year-over-year but down 30 basis points from April, according to CommercialCafe. In

New Jersey, specifically, about 9.6 million square feet is currently under construction, of which only about 25 percent is pre-leased, compared to the average pre-lease rate of 75 to 80 percent in its “heyday,” according to Knee.

As for sublease availability, 160.5 million square feet of industrial space was available for sublease nationally at the end of the first quarter of this year — higher than sublease availability during both the pandemic and the Global Financial Crisis from 2007 to 2009, Healy said.

Tenants’ hesitancy to commit to new space also stems from the “concern of eroding consumer demand” resulting from the tariffs, as consumers may begin to limit spending to avoid added costs, Healy said.

“If we demand less goods, then we have lower demand for these warehouses, which will in turn decrease the demand for new construction,” Healy said. “Whether companies decide to absorb as much as they can to mitigate the impact of tariffs, or whether they pass those costs on to consumers — which ultimately they will do — will probably decrease overall consumption, and that decreased consumption is really the underlying reason for weakening demand.”

Redfearn said his approach to the situation is simple: forbearance.

‘You’re seeing a lot of these tenants just pause decisionmaking.’

“Everything just takes longer, so we just have to be patient,” he said. “I think buying on a good basis and leasing at market rents, not above market, is a way to keep the buildings leased.”

Meanwhile, Greek Real Estate Partners (GREP), which manages industrial properties across New Jersey, Pennsylvania and New York, is one landlord still vigorously developing amid the uncertainty in the market, albeit from a “relatively conservative” angle, according to managing partner David Greek.

Just in May, GREP acquired two major industrial properties on the East Coast — the 141,276-square-foot Everest Logistics Park in Croydon, Pa., for $36.8 million, and the 100,000-square-foot Trinity Commerce Center in Trinity, Fla., for $22.5 million.

“We are still very aggressively pursuing development sites,” Greek said. “That said, we think there’s definitely some weakness in the industrial market that we’ve seen for the past six months. We’ve been witnessing some weakness in tenant demand, and that’s why we’ve seen rising vacancy rates.”

Still, Greek said the firm believes “this is a point in time that will pass,” and that the trajectory for the country’s industrial market, especially in the Northeast, is a “very good, very bullish one.”

Things might not be so good on the West Coast, though, as tariffs continue to disrupt shipping volumes to key ports.

The Port of Los Angeles handled 25 percent less cargo

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than forecast in May, while job postings at the port were down by half, according to CommercialCafe’s report. The May dip reflects the initial 135 percent tariff placed on Chinese imports that went into effect in April, as ships take about six weeks to arrive in the U.S., the report said.

Ports along the West Coast, specifically in L.A., will see a larger impact from trade friction with China due to their proximity to Asia and position as the nearest ports of entry into the U.S., while East Coast ports may be slightly better off as they receive products mostly from Europe and India, Savills’ Healy said.

“There’s no question that port volume is down significantly, and I think their sort of big-box market is the Inland Empire, where deals are way off statistically,” JLL’s Knee said, referencing the California region. “So I think we just have to pay attention to those rates, because they can have a bigger impact on demand and where it’s going.”

The drop in cargo volume at ports, combined with concerns over consumer demand and leasing, has pushed industrial tenants to consider shifting their supply chains to within the U.S. in order to reduce the impacts of foreign fees.

In fact, companies are leaning on a set of “short-term tactics” to navigate the disruptions, according to a new report from J.C. Renshaw, head of supply chain consulting for North America at Savills.

Those tactics include stockpiling goods in anticipation of a future supply shock, turning to bonded warehouses and foreign-trade zones, using third-party logistics providers, shifting sourcing and production, rerouting to lower-duty ports, redesigning products into lower-duty classifications, and investing more in technology and automation, according to the report.

“Geopolitics, trade policy and tariffs, climate events and cost variability can significantly impact the global flow of goods,” Renshaw said in a statement. “While the longerterm strategy may be to incorporate flexibility and resilience into supply chain operations via shoring initiatives, [these short-term tactics] are the preferred path for many companies in dealing with current uncertainty and disruption.”

Some experts think it’s more important to absorb the excess space in the market before turning to alternatives.

“There’s a big push to increase manufacturing in the United States, but to uproot a globally dependent supply chain overnight isn’t possible,” Healy said. “It takes a lot of time and planning. … We have to absorb the excess in the market first, before we come to a point where we have a need to develop additional capacity.”

No matter how companies find their footing amid the uncertainty, President Trump’s erratic trade policies are set to have a major impact on the U.S. industrial market, with the full brunt expected sometime during the third and fourth quarters of this year and beyond, Healy said.

And while e-commerce, cold-storage, and food and beverage tenants will likely survive the impact, others will feel it a bit more.

A recent analysis by J.P. Morgan Chase found that a critical group of U.S. employers — businesses with $10 million to $1 billion in annual revenue, or roughly a third of private-sector U.S. workers — is set to face a direct cost of $82.3 billion from Trump’s current tariffs, the Associated Press reported.

Most of those companies, which are largely retail and wholesale businesses dependent on imports from China, India and Thailand, built up their inventories before the taxes could be imposed, but the other shoe is bound to drop soon.

“I don’t believe that tariffs are the solution to the challenge that we have with global inequality in trade,” Healy said. “We will feel the impact of the tariffs more in the United States, and it will impact industrial real estate demand more than they will feel it on the other side of the world.”

COMMERCIALOBSERVER.COM | JULY 8, 2025 | 31

FEATURE

Welcome to the surprisingly lively debate around fitting out spaceships and space stations

onstruction costs, rising interest rates and sustainability regulations have nothing on gravity, which imposes perhaps real estate’s steadiest limitation. No designer or developer — no matter how experienced or well funded — can work around one fundamental truth: What goes up, must come down.

That is, unless you’re designing for outer space.

From Blue Origin’s controversial influencer-packed voyage — which received backlash for its environmental impact — to everything going on with Elon Musk’s SpaceX, spaces for outer space have entered the orbit of popular culture. The commercial real estate industry has taken note, applying and tweaking hospitality concepts to amenitize spaceships and space stations.

Space tourism has proven its profitability, albeit with high costs for a niche market, said David Malott, CEO of Huntsville, Ala.’s AI SpaceFactory. (As home of the Marshall Space Flight Center and U.S. Space and Rocket Center, Huntsville is known as “Rocket City.”) Between 2024 and 2030, researchers anticipate that the space tourism market — which was valued around $1.3 billion in 2024 — will have a 31.6 percent compound annual growth rate, and by 2030 will be valued at $6.7 billion, according to a 2025 market report.

As this nontraditional form of real estate blasts off, all bets for traditional design are likewise off — though the same design pillars seem to create a through line between hotels on Earth and square footage hurtling past the Kármán line. Excluding the technical aspects of space operations and engineering, it is amenities that have emerged as the next wave of suborbital essentials, creating a new medium of hospitality. Now, space vessels increasingly must maintain the same aesthetic and comfort fundamentals as any in-demand office or hotel, yet with new challenges and parameters.

“The first rule of space — it’s a harsh one — is space wants to kill you,” said Malott.

“We romanticize space, and there are many romantic things about it, but humans are not designed for space.”

The product of engineers rather than

architects, space habitats have traditionally been designed around one primary function: to ensure safety and operations, said Malott.

“We thought that people at NASA were actually thinking about the astronauts and they were approaching everything from a human-centric approach, and that was very much not the case,” said Larry Traxler, Hilton’s senior vice president for global architecture and design. “What they were doing was trying to keep everybody alive, and do it in the most efficient way.”

In 2022, Traxler’s Hilton announced a partnership with Voyager Space on the Starlab Space Station. When that project emerged, Traxler noticed value-add solutions, and the collaboration has since put human-centered design — the same principle that entices employees back to the office and tenants to new high-rise apartments — at the forefront.

These human-focused features largely materialize through a better delineation of rooms to accommodate living, working and playing in orbit, as well as strategic aesthetics that help combat the inherent confines of a spaceship.

“Designing for outer space means you need to design for comfort in tight quarters, deliver elevated service in remote conditions, and personalize experiences,” Lori Horvath, hotels and hospitality practice lead for the Americas for project and development services at JLL, told Commercial Observer via email. “These are all directly transferable from current hospitality design principles that are evaluated and implemented on a daily basis.”

Granted, on quick voyages, like Blue Origin’s seven-minute mission, amenities and creature comforts don’t make much of a difference. “Short-term missions are really about the thrill of being there,” said Malott.

“You want to feel that you’re taken care of, that there’s a host who’s concerned about your safety.”

On longer trips, however, psychological and physiological factors come into play — “and I think that’s where design becomes more important than ever,” said Malott.

After all, it’s not like astronauts can go outside for a breath of fresh air — at least, not without a spacesuit — or socialize with

32 | JULY 8, 2025 | COMMERCIAL OBSERVER

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new people. Relieving confinement is therefore crucial, and something both Malott and Traxler have intentionally prioritized.

Imagine a hotel room, even a luxury suite at a five-star resort. “If you’re only in your room — ever in your room — even the most beautiful room could look like a jail, right?” said Malott, who has worked on designing multiple terrestrial hotels, as well as a Mars habitat. (The cost of something like this remains purely speculative, so Malott declined to comment on any numbers.) “The fact that the hotels have amenities and you kind of have freedom of movement to go from one space to another is important.”

To provide that freedom of movement within the confines of a spacecraft, Traxler’s

Hilton started to ask questions about zones for separate functions that would divide the space station into areas for entry and arrival, grooming, sleeping, working, and socializing.

“We realized that a lot of these questions were never asked,” said Traxler. “They sort of came together in a way that engineers thought was most efficient.”

The first International Space Station didn’t even have a dining table, he said.

“Imagine that very notion of communal gathering around a dining table and how that might bond and bring astronauts together who are from the U.S. and USSR — and that wasn’t even there,” said Traxler.

“They fashioned a table out of a scrap piece of material.”

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Now, Hilton’s space capsule — which is 26 feet in diameter — is divided into three different levels, each of which is about 8 feet high, said Traxler.

“Up and down don’t make the same logical sense as they do on Earth,” said Traxler.

“What we’re using the different levels for is to create a more social public floor, a more thoughtfully concentrated work floor. …

And then the bottom floor — which isn’t really the bottom when it’s moving sideways — is essentially dedicated to medical waste and showering and exercise. So, more noisy, less social and more private functions.”

This delineation of spaces evokes a design trend — flexibility in use — popularized during the pandemic. Commercial spaces that can easily morph in function

over the course of a day take advantage of any given space. Consider cafes that transition from coffee to lunch to happy hour, or offices and coworking spaces that double as gyms.

Outer space has less physical space to achieve this flexibility, but Traxler has leveraged aesthetics to delineate different spatial uses. Color and lighting go a long way in creating dedicated zones, orienting astronauts or space tourists to their surroundings.

“Maybe it’s the work zone, but it’s a brighter, whiter light that is more conducive to working,” said Traxler. “But, when you move into the more social zone, maybe that light morphs into a 2700 Kelvin, more like incandescent light, and it’s more sort of human-centric and less work-centric.”

Similarly, windows are a useful aesthetic tool to combat claustrophobia, though not without risks. “When you’re outside of Earth orbit and you’re outside of Earth’s magnetosphere, windows let in a lot of space radiation,” said Malott. “So you need to balance this between a human being’s desire to want to look out to the world beyond, and space radiation wanting to kill you if you’re exposed to it for too long.”

Humans can be exposed to space radiation for only a set amount of time, as outlined by the National Institutes of Health.

Once that time is exceeded, “your odds of getting cancer increase beyond what’s acceptable,” said Malott.

To circumvent these health risks without surrendering to claustrophobia, high-tech

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features may be a designer’s best bet.

Technologically aided smart windows that log how long someone is exposed to space radiation could alert the vessel’s inhabitants about when they need to open and close their shutters, said Malott.

This window limitation underlines the constraints of designing for space vessels — which, while increasingly human-centric, adhere to a unique set of rules. Sweat, for instance, floats in space, making a space station’s delineation of uses all the more important.

“You don’t want some of those things that are coming off of the treadmill — or the astronaut on the treadmill — anywhere near your food. And from a noise and energy perspective, it doesn’t coexist well,” said Traxler.

Astronauts also can’t use gym equipment as they would in a hotel gym or a Crunch Fitness. Cardio equipment doesn’t work the same in zero gravity, said Traxler.

So if you run on a treadmill, you’ll bounce up unless you’re tethered to the machine, and muscle-building weight machines don’t function unless they’re pneumatic.

These rules of space create both challenges and new possibilities. Normally, real estate designers think about space from the ground to, say, 7 feet in the air as the zone in which human beings interact.

Yet, “if you have more height than that in space, it doesn’t matter because there’s no gravity to hold you down,” said Traxler. “And so you can use ceiling planes as a whole other wall of opportunity.”

Vertical designs likewise present unique opportunities. Malott’s Mars Habitat, for instance, was designed as four rooms stacked vertically with a double-shell design for structural reasons. Being able to see the levels above or below helps relieve some claustrophobia, while building vertically rather than horizontally was structurally efficient, said Malott, who compared the design to the structure of a dome.

Still, despite pre-existing efforts to factor human comforts into space design, Malott believes space hospitality can push the envelope even further. That cozy hotel bed doesn’t need to be a bed anymore — “you could be sleeping on the ceiling for all that matters,” said Malott, though he has yet to see any designers play to this potential.

“You can reimagine what it means to sleep, what it means to bathe, what it means to eat — and take advantage of the fact that you’re weightless and floating around,” said Malott.

“Everything has to be thought of in a very different way than it is on Earth,” said Traxler. “The fun part is maintaining that presence or that connectivity that people have that makes them comfortable on Earth. And then giving that to them in space is probably the next big step that we’ve got everybody thinking about now: How do we make it as seamless as possible to go to space, and not learn everything all over again?”

COMMERCIALOBSERVER.COM | JULY 8, 2025 | 33

FEATURE

A Mayor Zohran Mamdani might not end up as radically opposed to New York’s commercial real estate interests as some fear

By Aaron Short

34 | JULY 8, 2025 | COMMERCIAL OBSERVER

hen Zohran Mamdani upset Andrew Cuomo in the Democratic primary, New York’s corporate titans experienced a multiday meltdown.

Six hours after Cuomo — the preferred candidate of commercial real estate and much of the city’s business community — conceded the race to the Queens assemblyman and Democratic Socialist, Dan Loeb, the CEO of hedge fund Third Point, tweeted, “It’s officially hot commie summer.”

Red Apple CEO John Catsimatidis, who threatened to shutter his Gristedes grocery stores as Mamdani promoted his city-run grocery pilot, compared the Democrat to Fidel Castro. “We’re going to have a big fight before we give up New York City. We’re not giving up New York City that easily. We will do what we have to do now,” Catsimatidis told AMNY. Some Wall Street and real estate honchos are hoping Mayor Eric Adams, who skipped the primary and launched an independent re-election bid, can stop Mamdani’s momentum and were reportedly fundraising for him in the Hamptons last weekend. Real Estate Board of New York President Jim Whelan did not endorse either candidate, saying, “Voters will need to choose between practical or fanciful and extreme ways to continue the drop in crime, build much necessary housing, and create good jobs.”

Pershing Square Capital CEO Bill Ackman skipped the denial and anger stages, and moved straight to bargaining by offering to raise hundreds of millions of dollars for anyone who entered the race. “So, if the right candidate would raise his or her hand tomorrow, the funds will pour in,” Ackman wrote on X. For now, Mamdani is the overwhelming favorite. He declared victory after surging ahead of Cuomo by seven points in the first round of ranked-choice voting last month and quickly flipped endorsements. Mamdani’s backers now include Democratic leaders and labor unions, including the New York City Labor Council, the Hotel Trades Council and 32BJ SEIU, which had previously backed Cuomo. Once city election officials tabulated all the ranked-choice rounds on July 1, Mamdani finished with 56 percent to Cuomo’s 44 percent.

New York’s gilded set may have to make their peace with the results.

Partnership for New York City President Kathy Wylde, who is organizing a meeting with the Democratic nominee and city business leaders later this month, said many of her members have concerns about Mamdani’s management experience as well as his agenda on taxes, public safety and rent regulation.

“No one knows him. He didn’t come to them for money or for votes,” Wylde said. “I think that we need to give it some time for Mamdani to introduce himself to the business and real estate community.”

Lobbyist Suri Kasirer, who praised Mamdani’s communications and organizing skills, said real estate leaders would be wise to ensure the city succeeds if Mamdani wins in November.

“The city continues to have real, important challenges — affordability, mental health, public safety, dealing with the Trump administration — and now is not the time to give up on the best city in the world,” Kasirer said.

Mamdani’s campaign did not respond to an interview request.

The chief complaint business leaders have about the nominee concerns his tax plan.

The assemblyman is seeking to change New York’s corporate tax rate to 11.5 percent from its current 7.25 percent for businesses with an income base above $5 million, which his campaign estimated would generate $5 billion a year in revenue. He also wants to add a 2 percent

income tax on New Yorkers earning more than $1 million annually, which could raise $4 billion annually.

Mayors do not have the power to alter tax rates on their own. Mamdani would need to convince Albany lawmakers to make changes during an election year in 2026, which is unlikely. Democratic Gov. Kathy Hochul, who has not endorsed his bid, has been wary for several years about raising taxes. She dismissed Mamdani’s tax hike proposals in June, but worked with the legislature to extend the so-called millionaire tax in the state budget through 2032.

Instead, Mamdani could exert more influence on New York City’s property taxes. Last March, the state Court of Appeals ruled that the city must revamp its inequitable property tax system, suggesting that the city can make administrative changes to its assessments without needing approval from the legislature.

Echoing efforts that stretch back years, Mamdani’s campaign proposed adjusting property class assessment percentages in order to lower tax rates for outerborough homeowners while raising rates for brownstone, co-op and condo owners in wealthier areas. It also suggested adding so-called circuit breakers for low- and middle-income homeowners in gentrifying neighborhoods to prevent property taxes from becoming unaffordable; and eliminating a law that compares condo and co-op assessments to similar rental properties on the market.

Some elected officials criticized Mamdani’s approach for targeting “richer and whiter neighborhoods,” but the campaign wrote in its platform on its website it would largely follow a city panel’s property tax reform recommendations that were released in 2021. Mamdani also promised the city would build 200,000 new units of permanently affordable homes over the next 10 years.

Getting there won’t be easy.

Last year the Adams administration secured the passage of its City of Yes plan that reformed the city’s zoning rules to allow denser residential construction and eliminate mandatory parking requirements in some areas.

But the City Council allowed several neighborhoods to opt out of the changes and shrunk the number of estimated new units from 109,000 to 80,000.

Mamdani’s views on housing have evolved. In 2023, he fought against the extension of the state’s 421a tax incentive that would have subsidized developers who included below-market-rate units in mixed-use properties and opposed an Astoria, Queens, development that he believed was not affordable enough for the neighborhood.

But last month he told The New York Times he recognized the significant role that private developers play in the housing market. He also argued the city should upzone wealthier areas that have not allowed affordable housing projects and end parking minimums — ideas that other electeds, including Adams, have bandied about for years.

YuhTyng Patka, a partner at Adler & Stachenfeld, said developers appreciated that Mamdani recognized the seriousness of the city’s affordable housing crisis but doubted he could make substantial changes to land use and zoning regulations after the Adams administration’s overhaul.

“It took a long time to accomplish, and the end result was very different from the original proposal due to community feedback and pushback on certain aspects of it,” Patka said. “What any mayor wants is not always what he gets, and the mayor will need to work with the City Council, whose members may not wholly agree with the mayor’s goals.”

The most controversial plank in Mamdani’s

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FEATURE

MICHAEL M. SANTIAGO/GETTY IMAGES

‘No one knows him. He didn’t come to them for money or for votes.’

TRAIL MIX: Zohran Mamdani (left) and City Comptroller Brad Lander (center) — one of the candidates Mamdani beat in New York’s Democratic primary — campaigning together in late June.

campaign platform is his vow not to increase rents for those living in rent-regulated homes — something a mayor can directly influence.

On June 30, the Rent Guidelines Board voted to raise rents on stabilized units 3 percent on one-year leases and 4.5 percent for two-year leases despite calls from activists for a rent freeze. The board has now increased rents in each year of Mayor Adams’s four-year tenure.

Mamdani did not attend the board meeting but chastised Adams, who appoints a majority of the members on the panel, for “placating real estate donors rather than serving the working people he once claimed to champion.” He

pledged to appoint board members who would not approve any increase on rent-stabilized homes next year.

But some landlords warned they cannot pay for repairs to their buildings or return vacant units to the market if Mamdani gets his way.

“I can’t stress enough that most of the rent-stabilized housing stock cannot withstand a four-year premeditated rent freeze without looking at a shred of evidence,” said Kenny Burgos, CEO of the New York Apartment Association, which represents the owners and operators of 500,000 apartments.

Mamdani will ultimately have a choice to make between

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using his position as a bully pulpit to express ideology or deliver services to those who elected him. Those could overlap — by halting rent increases, for example — but he may have to break from allies who want affordable housing to be built entirely by the public sector.

“I would be very thoughtful about reining in the more extreme voices around him,” said Ken Fisher, an attorney with Cozen O’Connor’s Business Law Department. “The rhetoric around rent increases was based on a disapproval of real estate being privately owned at all. He’s moved away from that, but I suspect some of that will come back in terms of how they put the government together.”

COMMERCIALOBSERVER.COM | JULY 8, 2025 | 35

EVENT

Experts at a recent Commercial Observer multifamily forum went long on cleverer ways of getting projects from conception to construction

By Mark Hallum | Photos by Greg Morris nvestors are getting more creative when it comes to building multifamily in the United States, as economic conditions continue to be uncertain at best.

That was the main takeaway from a June 18 Commercial Observer forum for leading forces in the multifamily development world at Convene’s space at 101 Park Avenue.

The morning began with a fireside chat between Grant Cardone of Cardone Capital and Wells Fargo Managing Director of Multifamily Capital Horatio Jones, who picked the former’s brain about raising capital through creative means such as cryptocurrency, and taking a cowboy mindset to volatility.

Crypto’s integration into real estate and government investing could turn the real estate investment trust world on its head, according to Cardone, especially as the next generation invests in digital tokens.

“When everything is stable and certain, what fun is that? I like the adventure,” Cardone said. “The $4 trillion dollar REIT business is broken. The model’s broken. You see it right now with redemptions and cash distributions. They’re playing this money over here to pay out this, and you’ve got pension funds that are pissed off. It’s a problem.”

The best asset class in the near future will be rental homes, Cardone said, as the young people he interacts with through his social media presence seem to show little interest in owning.

The first panel of the day, “National Multifamily Market Outlook: Investor Sentiment for This Red Hot Market,” was moderated by Eric Herburger of Citrin Cooperman Advisors. It featured Jeff Rosen of owner MAG Partners, Yisroel Berg of investor Harbor Group International, Shawn Townsend of Ease Capital and Daron Tubian of Barings.

Rosen noted that when competitors and clients are scrambling for solutions to debt, that’s the time to strike.

(l-r) Grant Cardone and Horatio Jones.

“When capital is constrained, we see that as an opportunity because a lot of players are going away,” Rosen said. “A lot of developers are moving into other asset classes or other markets, so just looking at it from a MAG Partners perspective, the more constrained it gets, the more that very small subset of capital that’s not in the credit equity side is going to move to those top-tier developers.”

Leo Jacobs of law firm Jacobs P.C. moderated the next panel, “The Great Reset: Floating Rate Maturities & Opportunistic Strategies Geared for Generational Wealth.”

Panelists were Teodora Zobel of Midwood Investments, Brian Flax of Meridian Capital Group, Andrew Dansker of Dansker Capital Group and Tom Keefe of both lender MF1 and investor Limekiln Real Estate.

One prominent takeaway from the panel was that new capital is not really entering the market from wealthier families or individuals with cash on hand. Instead, they are essentially skipping multifamily as an investment.

“I’m not seeing a plethora of equity capital entering just ready to jump into anything,” Flax said. “You’re seeing a lot of cautious capital and people being incredibly selective because there’s also a lot of deal flow out there. There’s a lot of different distress opportunities so people can pick and choose.”

After a few sips of coffee during the networking break, the conversation resumed with a fireside chat between BRP Companies co-founder Meredith Marshall and Grace Betancourt Powers of DL Partners, during which Marshall discussed his start in multifamily real estate as a hobbyist looking for passive income.

After building the 30-story, 539-residence project at Jamaica Crossing in Queens, Marshall is now working on developing a site in Hudson Yards with BXP and Moinian Group. At least 35 percent of the units will be affordable for people earning 30 percent of the area median income (AMI).

While Low-Income Housing Tax Credits

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(l-r) Daron Tubian, Yisroel Berg, Jeff Rosen, Shawn Townsend and Eric Herburger.

Teodora Zobel.

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EVENT

‘You’re seeing a lot of cautious capital and people being incredibly selective because there’s also a lot of deal flow out there.’

Grace Betancourt Powers.

(l-r) Eleonora Bershadskaya, Andrea Wenner and Robert Sanna.

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(LIHTCs) are making the project possible, Marshall said there’s still something missing on the policy side to help lower- to middle-income renters affected by inflation.

“It covers low income up to 60 and 80 percent AMI, but what if you make 85, 90, 100 percent of AMI?” Marshall said. “What if you make $100,000 like a lot of my younger family members who are recent college graduates? They’re in my basement right now. They would rather spend money on other things than spend 50 percent of their take-home pay on housing, so we have to address the missing middle.”

Marshall said his firm is coming up with models to address this with the private sector.

David Shamshovich of law firm Belkin, Burden, Goldman moderated the panel titled “Addressing Affordability & Workforce Housing Across the Map — Tax Incentives, Removing Barriers & the Role of Public-Private Partnerships.” Speakers included Robert Sanna of BFC Partners, Andrea Wenner of lender MSquared, Richard Roberts of Red Stone Equity Partners and Eleonora Bershadskaya of investor the Vistria Group.

New York may have tax incentives with the 485x abatement program, but it’s not nearly enough to make deals pencil out when affordable housing transactions can require up to 10 or 12 sources of financing, according to Roberts.

“A lot of that is driven by cost,” Roberts said. “I used to tell people that there’s no such thing as an affordable brick or an affordable nail.

Maybe you get a break on labor because you’re operating in a somewhat different cost environment in the affordable realm relative to the market-rate realm, but we have to subsidize things so much to create a single unit that it creates a tremendous amount of complexity in bringing things to market.”

Mike Leipart of sales and investment firm the Redeavor Group led the final panel, “Following the Capital: Understanding Which Geographic Markets Are Attracting Investments & Why.” Panelists were Asi Cymbal of Cymbal DLT Companies, Danny Fishman of Gaia Real Estate, Marc Hershberg of Topaz Capital Group, Jordan Kornberg of Mast Capital, and Roy Stillman of Stillman Development International.

“I think in order to attract capital to a condominium project, you have to have many, many elements that distinguish it from the market — you can’t just be another project that’s being dumped onto the market,” Stillman said. “You have to really think that the market is smarter than you as opposed to the normal bias that you are smarter than the market. If you approach the analysis with the belief that the market is smarter than you, then you’re going to be very careful by first studying the market.”

(l-r) Roy Stillman and Mike Leipart.

COMMERCIALOBSERVER.COM | JUNE 24 - JULY 1, 2025 | 37

THE HARTBY

788 WILLOUGHBY AVENUE

The Plan WHO’S WHAT AT THE HARTBY

EXTERIOR RENDERINGS: COURTESY WOODS BAGOT; INTERIOR PHOTOS: COURTESY THE HARTBY; ALEX STANILOFF OF GOTHAM INTERIORS

DEVELOPERS: AVENUE REALTY CAPITAL AND PROPERTY RESOURCES CORP. ARCHITECT: WOODS BAGOT INTERIOR DESIGNER: ALCHEMY STUDIO LEASE AGENT: M.N.S. REAL ESTATE

APSE-OLUTELY FABULOUS: The redevelopment of the 19th century Catholic college building at 788 Willoughby Street into 205 apartments called the Hartby included retaining some of the original property’s ecclesiastical flourishes. Those especially include the large, and often arched, windows. Some units also feature exposed brick that was part of the building’s initial exterior (bottom right).

By Amanda Schiavo After almost a decade of preservation and restoration work, 788 Willoughby Avenue in Bed-Stuy, Brooklyn, has been converted from a building once owned and used by the College of St. John the Baptist — which would later become Queens’ famed St. John’s University — into a 205unit mixed-income residential rental building known as the Hartby.

Leasing began in March at the building, where 30 percent of units are rent-stabilized. As of July 1, the building was 52 percent leased, with 85 signed leases.

The building dates to 1871 and was originally part of the Catholic school’s campus, which took up an entire city block. The Hartby was developed through a 99-year land lease

with the Catholic Church, which is typical for a deal of this sort. Units at the Hartby range from studios to two-bedrooms, with marketrate rents running between $2,700 and $4,000 per month.

The apartments of the Hartby, named for its location between Hart Street and Willoughby Avenue, incorporate some of the building’s original features, including ornate chapel windows, carved wood and domed cupolas. Many of those original touches have been preserved within the units, reflecting the church’s desire for the new building’s architecture to carry on some of Catholicism’s long-standing stylistic traditions.

On the third floor you will find the Chapel unit, a 1,294-square-foot apartment with two bedrooms and two baths. The

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unit’s name comes from the large window at the center of the living space that was once part of a chapel. Wood that frames the windows is original to the building, although it has undergone some restoration work, and the glass has all been replaced.

The box frame the window sits in has a ledge that makes a handy shelf for photos and knickknacks, or possibly even a bench seat. Imagine it’s winter and you are sitting up against that beautiful window on a snowy New York City Sunday with a hot coffee, just watching the flakes fall — sounds like heaven. (See what we did there?)

The amenity spaces have been crafted using stone that is original to the building, and some apartments have exposed brick that is also part of the building’s original exterior.

“We wanted to keep certain historic elements in this property,” Udi Kore, founding partner of Avenue Realty Capital, told Commercial Observer during a tour of the building. “But we also got to re-create something that was a big part of Brooklyn.”

Amenity spaces have been crafted into the 19th century foundation. Residents can enjoy a workout space, a pet spa, a landscaped private courtyard, a private party room, covered parking, a rooftop terrace, and a communal seating area known as the Winter Garden, which was still under construction at the end of June.

The exit at the back of the Winter Garden leads to the rear of St. John the Baptist Church, which will come in handy for any parishioners who live at the Hartby and wake up late for Sunday Mass.

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