Commercial Observer – September 1, 2026

Inside

20 About that CMBS distress spike 22 Affordable housing’s loan du jour 32 New York socialists on the march SEPTEMBER 1, 2026

FINANCE ISSUE

Barnburners David Welsh and David Schonbraun have staked their GreenBarn Investment Group on closing the most complex deals

TABLE OF CONTENTS

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Max Gross Editor in Chief

Cathy Cunningham Executive Editor

Tom Acitelli Deputy Editor

Isabelle Durso New York Digital Editor Greg Cornfield Associate Editor

Skip Card Copy Editor

Andrew Coen, Emily Davis Julia Echikson, Mark Hallum, Brian Pascus, Amanda Schiavo Staff Writers

Larry Getlen Contributing Editor

SALES

30 4 NEWS BRIEFS

Affordable Housing’s Newest Lending Tool

7 OFFICE

9 FINANCE Debt Deals of the Week Chart Finance

14 FEATURES Power Players GreenBarn Investment Group’s David Welsh and David Schonbraun.

22

Director of Client Marketing

Edward Cohen, Mark Rossman Partnerships Director

Josh Rozbruch Social Media Manager

DESIGN, PHOTO & PRODUCTION

Buzzy federal legislation to spur housing comes with a lot of carrots for lenders and builders, but misses key provisions.

Jeffrey Cuyubamba

Bytes on Sites

Jim Sewastynowicz

Art Director

Rohini Chatterjee Senior Visual Designer

27

Data Center Data Boom

To the Left, to the Left

Tech firm Atrium aims to track well over $1.3 trillion in financing deals for commercial real estate’s hottest asset class.

A wave of Democratic Socialist legislators in New York state could mean retail rent control, a longer data center moratorium and other policies unfriendly to real estate.

34 ENDNOTES

14

No More Pretending Billions of dollars in commercial mortgage-backed securities loans face hard maturities this year, teeing up a potential crisis.

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Olivia Cottrell

Photo Editor

Eliot Pierce SVP, Product & Operations

Ashley Roseman Director, Revenue Operations

Ramon Encarnacion IT Manager

OBSERVER MEDIA

On a Very Busy 2026 So Far for CMBS Trepp’s Stephen Buschbom and Andy Boettcher break down the fresh demand for commercial mortgagebacked securities.

Strategic Account Director

Director of Audience

Location intelligence in the retail trade is better and more essential than ever. There are a couple of big caveats, though.

The Takeaway

Sona Hacherian

Samantha Stahlman

ROAD to Nowhere?

Leases of the Week

Senior Partnerships Director

MARKETING & EVENTS

Banks, ratings agencies and borrowers are embracing taxexempt commercial mortgagebacked securities.

6 RETAIL

Brigitte Baron

Joseph Meyer Chairman

The Plan

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News MOVING THE NEEDLE

The U.S. life sciences real estate market remains oversupplied, but improving funding conditions and a sharply reduced construction pipeline are beginning to set the stage for a recovery, according to new research from Cushman & Wakefield.

Asking rents at U.S. life sciences facilities averaged $64.17 per square foot in the second quarter of 2026, down 5.3 percent compared to last year, and vacancy climbed nearly 200 basis points to 24.3 percent. Cushman & Wakefield expects market rents to continue to slip, particularly in heavily supplied regions, but said stronger funding and occupier demand could stabilize rents over the next 18 to 24 months.

Life sciences inventory has expanded from 171 million square feet in 2021 to 239 million square feet today, but the construction

pipeline now represents only 2 percent of inventory, down from 17 percent at its mid2023 peak. Just 1.2 million square feet was delivered through the first half of this year, which is an 82 percent decline from the first half of 2025, with future development increasingly concentrated in pre-leased and build-to-suit projects.

Capital markets are also gradually reopening. R&D investment sales totaled more than $9.3 billion during the four quarters ending in June, up 4 percent from a year earlier.

Deal count rose 9 percent to 292, above the prior 10-year average, although average transaction size declined 5 percent.

Globally, venture capital investment reached $29.9 billion in the first half of 2026, up 30 percent from last year, and the strongest first-half showing since 2022. North

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For Life Sciences Real Estate, 2026 Is a Tale of Stabilization

LOT OF BEAKERS: Venture capital for life sciences hit a four-year high in the first half of 2026.

America accounted for $17.9 billion, up 35 percent. IPO volume nearly tripled to $6.8 billion, while global mergers and acquisitions activity reached $97.2 billion, nearly three times its level a year earlier.

Cushman & Wakefield points to a market moving from correction into stabilization,

with capital returning to the underlying industry, muted speculative construction, and recovering investment sales. But with vacancy still historically high in major hubs, underwriting remains dependent on tenant credit, lease term and existing occupancy rather than broad sector enthusiasm.—Gregory Cornfield

RENDERING: COURTESY OF KINSMEN PROPERTY GROUP

Kinsmen Property Plans to Build Housing at 156-166 Bowery

MEET THE NEW BOWERY: The three-building project would have 322 units.

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Kinsmen Property Group, a New York Citybased real estate development and investment firm, plans to build 322 homes along the Bowery in Manhattan’s Nolita neighborhood.

After previously filing plans to demolish a 15,000-square-foot set of vacant buildings at 156-166 Bowery in October 2024, Kinsmen has now filed a land use application with the Department of City Planning to transform the lot into three mixed-use, mixed-income buildings with a total of 322 homes, according to the firm.

If approved, the three buildings would comprise a 29-story building with 124 affordable apartments for seniors; a 26-story building with 99 mixed-income units and 3,260 square feet of ground-floor retail space; and another 26-story building with 99 mixed-income units and 4,391 square feet of ground-floor retail space.

The project, which would be designed by architects Kohn Pedersen Fox and Beyer Blinder Belle, is expected to enter public review through a Uniform Land Use Review Procedure (ULURP) by the end of the year.

“We are excited to bring more than 300 new homes to Lower Manhattan at a time when housing

is urgently needed across the city,” Ari Zagdanski, principal of Kinsmen, said in a statement. “This project is designed to honor the rich history of the Bowery while also addressing the city’s housing needs head-on.”

The site at 156-166 Bowery has already been through various different planned projects. In 2022, previous owner Real Estate Equities Corporation (REEC) — which had signed a 99-year ground lease for the properties in 2020 for $50 million — filed plans to construct a seven-story, 73,000-square-foot retail and office building on the site. Construction on that project eventually stalled.

It’s unclear whether REEC still owns the ground lease at the Nolita site, which Kinsmen bought in a set of separate purchases in 2016 and 2017 for a total of $53.5 million, according to records.

Local Councilmember Christopher Marte, who is partnering with Kinsmen in the approval process of the new filing, said the project is a “critical benchmark” for the Bowery area, as it will bring the same number of senior affordable units that were slated to replace Elizabeth Street Garden a few blocks away.

Plans to build housing on the garden were officially scrapped earlier this month. —Isabelle Durso

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NEWS

COURTESY OF COLLIERS

T&E Development Buys West Chelsea Site for $34M

DEALERS: (l-r) Dylan Kane, Jared King and Zach Redding repped seller PPHE.

A development site in Manhattan’s West Chelsea area envisioned in 2019 as hotel and luxury residences by an international hospitality firm is now poised for a new residential journey.

Amsterdam-based PPHE Hotel Group sold the property at 538-542 West 29th Street to Brooklynbased T&E Development for $33.5 million in a deal that closed toward the end of August. Colliers represented the seller with a team led by Zach Redding, Dylan Kane and Jared King. Sporn Group’s Lenny Sporn arranged the sale on behalf of the buyer.

PPHE Hotel Group announced in March 2019 it had formed a joint venture with developer Largo to acquire the vacant lot for roughly $42 million, with plans to build a 98-key hotel and 55 condos. An entity connected to PPHE field demolition permits for the project in late 2023, Crain’s New York Business reported at the time.

Greg Hegarty, co-CEO of PPHE, said in a February statement on the pending sale that “significant changes to the regulatory landscape” for ground-up development of hotel projects in New York following the site’s 2019 acquisition contributed to the decision to part ways with the property.

The 9,875-square-foot vacant lot between 10th and 11th avenues has 74,063 square feet of development potential under New York City’s C6-3 zoning within the Special West Chelsea District and will not require an affordable housing component, according to Colliers. Redding said the property is one of the few remaining unconstrained development sites in West Chelsea and would be well positioned as a residential project given there is only one condo building currently under construction between West 20th and West 30th streets.

T&E Development did not return a request for comment. —Andrew Coen

Spitzer Can Demolish 985 Fifth Avenue Following Lawsuit Developer Eliot Spitzer will finally get to demolish 985 Fifth Avenue after suing the state to obtain approval.

Spitzer claimed that the state’s Division of Homes and Community Renewal (HCR) was delaying the approval of an application to not renew rent-stabilized leases in the building, a necessary step before the property could be redeveloped. Spitzer ultimately won the state’s blessing.

The two-year request to end the rentstabilized leases on the property followed approval from the New York City Landmarks Preservation Commission in 2023 to take a wrecking ball to the 25-story rental property and construct luxury condominiums in its place.

Spitzer, a former New York governor and attorney general, could not be reached for comment. HCR, now under the administration

City Plans Nearly 700 Apartments on East Harlem Parcel

of Gov. Kathy Hochul, did not respond to a request for comment.

Spitzer’s Spitzer Enterprises has been advancing on other aspects of the project despite the delay, unveiling designs by SLCE Architects for the property in November 2025 which would yield 25 condo units, according to New York YIMBY. His company has owned the property since at least 2018 after buying seven residential buildings in the city. —Mark Hallum

In its third acquisition of student housing in Manhattan this summer, Hawkins Way Capital purchased a residence hall near Union Square for $51.5 million from the New School, according to city records made public Aug. 25.

Hawkins, using the entity 135 E 12th Owner, bought Loeb Hall, a 268-bed residence hall at 131-135 East 12th Street, directly from the New School, records show. Joshua Bird, managing director and general counsel at Hawkins, signed the deal for the buyer, while Loretta Ferrari, chief financial officer at the New School, signed for the seller.

“We’ve long been looking for the right opportunity in this neighborhood, and this property represents an ideal addition to our portfolio,” Ross Walker, managing partner at Hawkins, said in a statement to Commercial Observer.

It’s unclear why the New School stopped using Loeb Hall as a dormitory for its students, but the property was removed from its undergraduate housing options this year.

Loeb Hall is four blocks east of the New School’s main University Center and administrative offices on Fifth Avenue, although the sprawling urban campus has numerous sites near Union Square.

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Hawkins Way Buys Residence Hall From the New School

CLASS ACTION: The hall at 131-135 East 12th Street has 268 beds, and sold for $51 million.

The former Loeb Hall will undergo renovations and be repositioned under Hawkins’ Found Study student housing platform, according to a spokesperson for Hawkins.

It’s unclear who brokered the recent sale.

A spokesperson for the New School did not respond to a request for comment.

The deal is Hawkins’ third major student

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housing acquisition in Manhattan in recent months. The deals are part of Hawkins’ broader strategy — along with joint venture partner Varde Partners — to form its Found Study portfolio comprising student housing assets across Manhattan. A spokesperson for Varde Partners did not respond to a request for comment. —I.D.

An affordable and supportive housing complex is slated for a city-owned site in Manhattan’s East Harlem neighborhood.

The city’s Department of Housing Preservation and Development (HPD) submitted plans toward the end of August to rezone the city block surrounding 22 East 119th Street. The requested amendments will facilitate a housing project spanning two buildings with a total of 698 units. PincusCo first reported on the filing.

The site is currently occupied by a six-story, 174-unit single room occupancy building where Volunteers of America–Greater New York hosts supportive housing for formerly homeless single adults, many of whom are veterans.

In accordance with a city policy that avoids “spot zoning” individual lots, the rezoning proposal would impact the entire East Harlem block, bounded by East 118th and East 119th streets, between Madison and Fifth avenues.

In addition to the site’s designation as an urban renewal area and the disposition of city-owned property, HPD’s requested amendments would label the block as a Mandatory Inclusionary Housing area, ensuring affordable housing will be a part of any future redevelopments of the block’s privately owned buildings.

Land use documents for 22 East 119th Street were not available, but prior documentation of the project, sponsored by Volunteers of America– Greater New York, included a 23-story supportive housing tower and a 25-story affordable housing tower. Plans also incorporated community space and commercial facilities for the nonprofit, with funding sought through HPD and the city’s Housing Development Corporation.

Volunteers of America–Greater New York did not respond to a request for comment. — Emily Davis

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Retail

Indian Eatery Picks Hell’s Kitchen for Second Spot

INSERT CHEESY TAGLINE HERE

Whole Foods Sites a Daily Shop at 509 Third Avenue Whole Foods Market leased a 9,000-square-foot retail space in Manhattan’s Murray Hill neighborhood.

The 15-year deal occupies a ground-floor space and outdoor terraces at 509 Third Avenue, according to a memorandum of lease filed in city records toward the end of August.

The 35-story, 229-unit apartment tower, known as the Murray, was developed by Kahen Properties with Lalezarian Properties.

Whole Foods’ newest Manhattan location will be on the smaller side. The store will follow the Amazon-owned grocer’s new Whole Foods Market Daily Shop format. The quick-trip urban shops sell grab-and-go meals alongside fresh produce, meat, bakery items and local specialty foods, according to the company’s website.

The format was first rolled out in nearby Lenox Hill in 2024, and has since arrived in cities nationwide. Additional locations in Brooklyn and Hoboken, N.J., were announced late last year. Most recently, the grocer signed a lease for 8,121 square feet to open a daily shop at 1524 Second Avenue on the Upper East Side.

It is unclear whether either party on the deal worked with an outside brokerage.

The asking rent for the ground-floor space was not disclosed in the memorandum, but retail space in the nearby Herald Square area was $394 per square foot during the second quarter of 2026, according to CBRE data.

Spokespeople for Whole Foods, Kahen and Lalezarian did not respond to requests for comment. —Emily Davis 6 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

Napoli is going to do well in that location given the foot traffic on that stretch.”

Aziz represented the landlords alongside Carson Shahrabani and Daniel Zacaim, while the tenant did not use any outside brokers.

“When a pizzeria space turns over on Fifth Avenue, the read-through for the neighborhood is usually positive — it tells you the trade area still supports that price point and that use,” Zacaim said in a statement.

Pizza Napoli, which could not be reached for comment, has the potential to benefit from everyday foot traffic along Fifth Avenue, as well as from dispensary NY Cannabis Company, which is right next door. —Mark Hallum

PER MONTH: Asking rent started at $25,000.

Mac Cosmetics’ SoHo Flagship Relocates to 579 Broadway

RACHEL MURRAY/GETTY IMAGES FOR MAC COSMETIC

Pizza Napoli signed a 2,500-square-foot lease at Jonathan and Jan Soleimani’s 383 Fifth Avenue just off East 36th Street in Midtown, where the asking rent started at $25,000 per month, according to landlord broker Meridian Capital Group.

The tenant signed a 15-year lease for the space, Meridian said. The site was previously the home of Famous Italian Pizza.

“Fifth Avenue retail continues to show real strength for food and beverage users, and this was a straightforward reposition — pizzeria to pizzeria, minimal downtime for the landlord,” Meridian’s Noam Aziz said in a statement. “Jonathan and Jan were great partners throughout the process, and Pizza

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Pizza Napoli to Open in 3K SF at 383 Fifth Avenue

New Jersey-based Indian restaurant Samudhra is establishing a presence across the Hudson River in Hell’s Kitchen.

The eatery signed a 10,000-square-foot lease on the ground level of the Ellery at 312 West 43rd Street, owned by Taconic Partners and National Real Estate Advisors.

It will be Samudhra’s second location in the U.S., following a restaurant in Franklin Park, N.J., according to the landlords.

Taconic did not disclose the asking rent or the length of the lease, but asking rent for prime retail space in the nearby Times Square retail corridor of Broadway and Seventh Avenue from 42nd to 47th streets was $1,400 per square foot in the second quarter of 2026, according to a report from CBRE. CBRE’s Lon Rubackin, Michael Kadosh and Bevan Cohen negotiated on behalf of the landlord while Brad Schwarz from Lee & Associates handled the deal for the tenant.

CBRE and Lee & Associates did not respond to requests for comment. —M.H.

DIFFERENT SHADE: The vendor will be moving two blocks from 506 Broadway.

Mac Cosmetics selected a new foundation in Manhattan’s SoHo neighborhood.

The global makeup brand signed a 5,325-square-foot lease at 579 Broadway between Prince and East Houston streets to host its next flagship location in the trendy shopping corridor, according to an announcement from landlord broker Newmark. The deal represents a relocation of just two blocks from Mac’s current perch alongside Bloomingdale’s at 506 Broadway.

The landlord at 579 Broadway, Lord Shivas Properties, was represented by Newmark’s Ariel Schuster, Michael Paster and Logan Ryan. Paster said in a statement that the location, neighbored by brands like jeweler Pandora and clothing store Free People Movement, was a “natural fit for Mac Cosmetics.”

The brand plans to occupy approximately 3,825 square feet on the ground floor and 1,500 square feet of lower-level space within the five-story building. The length of Mac’s lease and the asking rent were unclear, but a report from CBRE found retail rents near SoHo’s Prince Street averaged $1,408 per square foot during the second quarter of 2026.

Mac will take possession of the storefront in January, according to Newmark. The current occupant, British fashion retailer AllSaints, will occupy the space through the end of the year. Cushman & Wakefield’s Mike O’Neill, Jason Greenstone and Taylor Reynolds negotiated the lease on behalf of Mac Cosmetics.

The lease offered Mac the opportunity to secure a highly visible location in the corridor, O’Neill said in a statement.

“We’re pleased to have helped facilitate a transaction that aligns Mac with a location well positioned to support its long-term retail objectives,” O’Neill said. —E.D.

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Havas Health 254,118 Renewal and Expansion Havas Health, a global health and wellness communications network, is expanding its Midtown headquarters.

Havas, which creates advertising, public relations and marketing campaigns for health care brands, signed a 15-year deal to renew its existing 189,461-square-foot office at George Comfort & Sons’ 200 Madison Avenue and tack on an additional 64,657 square feet,

KeyBank 112,924 Renewal and Expansion A major banking institution added 15,292 square feet to its Manhattan office footprint.

KeyBank signed a 15-year deal to renew its existing space and expand to 112,924 square feet at Elecor Properties’ 1301 Avenue of the Americas across the entire 35th, 36th and 37th floors, as well as portions of the 28th and 38th floors, according to the landlord.

Asking rent for the Plaza District office tower

Genius Sports 53,000 Relocation and Expansion Sports analytics and technology company Genius Sports is relocating its U.S. headquarters to 1290 Avenue of the Americas.

The London-based company’s new 10-year lease with landlord Vornado Realty Trust spans 53,000 square feet — nearly double its current space — across part of the tower’s sixth floor. Asking rent was $99 per square foot.

Newmark’s Josh Berg and A.J. Dorn

Ascot Group 44,100 Renewal Mitsui Fudosan America saw some big office deals signed at 1251 Avenue of the Americas last week.

Insurance company Ascot Group, which provides property and casualty coverage for businesses, signed a 12-year extension for its 44,100-square-foot offices on the entire 43rd floor of the 54-story Midtown property, according to sources familiar BECOME A COMMERCIAL OBSERVER MEMBER | JOIN AT COMMERCIALOBSERVER.COM/MEMBERSHIP

according to the landlord.

The deal, which stretches through at least 2041, brings the marketing company’s total footprint to 254,118 square feet across five floors of the 26-story office building seven blocks south of Grand Central Terminal.

Asking rents for available office space in the building — which George Comfort owns alongside Loeb Partners Realty and Jamestown — average $70 to $75 per square foot, according to ownership.

Havas has been a tenant at 200 Madison Avenue since the late 1990s.

“Havas Health’s growing long-term

commitment to 200 Madison Avenue is a testament to the appeal of the hospitality-focused, amenity-rich environment we are cultivating for our tenants,” Peter Duncan, president and CEO of George Comfort, said in a statement.

Duncan and Alexander Bermingham represented ownership in-house in the deal, while Newmark’s David Falk and Jason Greenstein repped the tenant.

Other tenants at 200 Madison Avenue include architecture firm Spectorgroup and law firm BraunHagey & Borden, as well as fitness brand TMPL and furniture store Roche Bobois in the retail space. — Isabelle Durso

was not disclosed, but the average asking rent for office space in Midtown in the second quarter of 2026 was $86.18 per square foot, according to a report from CBRE. “Expanding our footprint at 1301 Avenue of the Americas enables us to support our vision while positioning us for continued growth and enhanced service to our clients across the region,” John Manginelli, Hudson Valley and metro New York market president at KeyBank, said in a statement.

JLL’s Matthew Astrachan, Justin Haber, Kyle Riker, Adam Hill and Bob Beckstedt represented KeyBank, while Peter Brindley,

Douglas Neye and Sean Kirk handled negotiations in-house for Elecor.

Other tenants in the building between West 52nd and West 53rd streets include investment bank Piper Sandler, which signed a lease for 140,000 square feet in August 2025, back when Elecor was still Paramount Group.

Michael Nierenberg’s Rithm Capital acquired Paramount Group’s 16-building portfolio and in April 2026 rebranded the former real estate investment trust as Elecor. — Mark Hallum

negotiated the deal on behalf of Genius Sports, while Vornado was represented in-house by Ryan Levy and Edward Riguardi.

The deal offers Genius Sports a marked expansion from its 28,000-square-foot West Chelsea offices at 512 West 22nd Street.

That building changed hands last year from Vornado and the Albanese Organization to Raghsa Real Estate for $205 million.

Genius Sports’ arrival brings 1290 Avenue of the Americas to 95 percent occupancy. The 43-story, full-block building between 51st and 52nd streets is anchored by investment management firm Neuberger Berman, and

recently underwent a $45 million renovation that updated its lobby and building amenities.

Vornado owns 70 percent of the building, while the Trump Organization holds a passive 30 percent stake.

Other recent arrivals at the tower include business consulting firms Portage Point Partners and Protiviti, which Commercial Observer reported leased a total of 93,000 square feet late last year. In January, investment manager Oaktree leased the building’s entire 12th floor, just a few stories below law firm Selendy Gay’s 101,000-square-foot offices. — Emily Davis

with the deal.

Ascot was previously subleasing the space, with the new deal giving it a more permanent office in New York City. The firm, founded in 2001, operates across the U.S., Bermuda and in London.

Asking rent for Ascot’s space was $150 per square foot. 1251 Avenue of the Americas sits between West 49th and West 50th streets.

CBRE‘s John Nugent and Alexander Golod negotiated on behalf of Ascot, while Newmark‘s David Falk, Pete Shimkin, Eric Cagner and Claire Koeppel repped

the landlord.

Meanwhile, law firm DLA Piper also signed a new deal at 1251 Avenue of the Americas last week to expand to 251,600 square feet. Other tenants at the building include alternative investing firm LGT Capital Partners and Trust Company of the West. — M.H.

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Office Leases of the Week

LEASES

DLA Piper 41,600 Expansion In another deal signed at Mitsui Fudosan America’s 54-story Midtown office tower at 1251 Avenue of the Americas last week, law firm DLA Piper expanded its offices by 41,600 square feet.

DLA Piper, which specializes in corporate law and dispute resolution for large companies, governments and organizations, will expand onto the entire 29th

Thinking Machines Lab 21,500 New Artificial intelligence research startup Thinking Machines Lab is coming to New York.

Just a year and a half after launching in San Francisco, the company inked a 21,500-squarefoot lease at Kalimian Properties’ 79 Fifth Avenue just one block west of Union Square.

The terms of the deal were not disclosed, but asking rents in the 18-story office building

Savills 20,481 New The deal-makers at Savills struck a lease of their own.

The global real estate advisory firm is expanding its New York City presence by taking 20,481 square feet for a satellite office at Rudin’s 560 Lexington Avenue, according to the landlord. Savills will occupy the entire third floor at the 22-story Midtown East tower for a five-year term.

T&M USA 14,000 New Circle Realty Group closed on 37,600 square feet of new leases in Midtown last week.

The largest deal at 225 West 34th Street, also known as 14 Penn Plaza, was for cybersecurity firm T&M USA, which took 14,000 square feet, according to Circle Realty. The length of the lease was unclear.

It’s also unclear whether the deal represents a new office or a relocatoin for T&M, which 8 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

floor of the property on an 8.5-year term, according to a source with knowledge of the deal.

The new expansion brings the law firm’s total footprint at the building between West 49th and West 50th streets to 251,600 square feet. It already had 210,000 square feet on the 24th through 28th floors.

The asking rent for DLA Piper’s deal was $140 per square foot, according to the source.

CBRE’s Mike Wellen and Ken Rapp handled the deal for DLA Piper, while Newmark‘s David Falk, Pete Shimkin,

Eric Cagner and Claire Koeppel represented the landlord.

Other recent deals at 1251 Avenue of the Americas include a 44,100-square-foot renewal for insurance company Ascot Group, a 41,600-square-foot lease for alternative investing firm LGT Capital Partners, and an expansion to 80,200 square feet for Trust Company of the West. — M.H.

hover slightly above $100 per square foot, according to a source familiar with the deal.

Thinking Machines Lab was founded in early 2025 by Mira Murati, former chief technology officer at OpenAI, to design specialized AI models and create tools for researchers and businesses to train their own models. The company achieved a $12 billion valuation in July 2025.

JLL’s Justin Haber, Kyle Riker and Emma Gill negotiated the lease on behalf of the tenant, while Newmark’s David Falk, Daniel Levine and Dylan Weisman represented the landlord.

Thinking Machines Lab’s new East Coast home will occupy the entire fourth floor of 79 Fifth Avenue. The building between East 15th and East 16th streets is also home to consulting company Capgemini America, streaming giant Hulu, and the New School, as well as fashion retailer Free People on the ground floor.

Kalimian Properties’ Albert Kalimian did not respond to a request for comment on the deal. — E.D.

Asking rent for the deal was not disclosed, but the average asking rent for Midtown office space was $84.88 per square foot in July, according to Colliers.

Rudin’s Kevin Daly and Craig Panzirer represented the landlord in-house in the deal, alongside a CBRE team of Brett Shannon, Peter Turchin, Eric Deutsch, Lauren Levy and Jacob Rosenthal. Savills represented itself in the transaction.

Savills’ new office space sits four blocks north of its U.S. headquarters at 399 Park Avenue.

The new lease will accommodate Savills’

program and project management group. The added elbow room comes just a few weeks after Savills completed its acquisition and launch of Eastdil Secured Savills in a major platform expansion.

560 Lexington has attracted more than 110,000 square feet of deals that have now been completed there this year, according to Rudin.

Hedge fund SummitTX Capital took nearly 18,000 square feet there earlier this year, followed by investment firm Ally Bridge Group’s 6,440-square-foot relocation in May and financial firm Marex’s 39,552-square-foot deal in April, to name a few. — E.D.

has another New York City office listed at the Helmsley Building at 230 Park Avenue on its website.

Meanwhile, civil engineering company Bohler Engineering also signed a new deal at 14 Penn, expanding from 8,000 square feet to 14,000 square feet with a 10-year lease. Asking rent in the building was $67 per square foot.

“These tenants came to me because we’re at the center of transportation and we have a first-class property,” Circle Realty President Jay Futersak said. “Tenants know that what we promised is what we deliver.”

Futersak represented his own firm in-house

and both tenants in the deals.

Smaller recent deals in the building were for accounting and advisory firm Calibre CPA Group, which signed a 10-year, 6,100-squarefoot lease and is relocating from 462 Seventh Avenue.

Discrimination law firm Fitapelli & Schaffer is also relocating from 20 Liberty Street to 14 Penn with a new 3,514-square-foot lease. —M.H.

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Office Leases of the Week

Truist Lends $277M on Jersey City Multifamily Tower Build A joint venture between Rockpoint and Urby has secured $277 million of construction financing to develop the second phase of a multifamily tower in Jersey City, Commercial Observer has learned.

Truist provided the loan for the sponsorship’s 748-unit 201 Hudson – by Urby project along the Jersey City waterfront. Rockpoint and Ubry joined forces to acquire land at 201 Hudson Street for the project in July, as CO first reported at the time.

“This financing reflects Truist’s continued commitment to supporting premier sponsors pursuing transformative multifamily developments in high-growth urban markets,” said Rebecca M. Cox, senior vice president and market manager at Truist National Real Estate.

The transaction was led by Katie Kennedy, Northeast market leader at Truist, with Walt Reece, a director of real estate syndicated finance at Truist Securities, leading the syndication, according to the firm.

Newmark negotiated the debt with a team consisting of Jordan Roeschlaub, Chris Kramer, Holden Witkoff and Jack Fenton.

The brokerage firm also advised the joint venture partners on the joint venture capitalization with a team composed of Adam Spies, Adam Doneger and Michael Collins.

Located in Jersey City’s Paulus Hook neighborhood, 201 Hudson – by Urby marks the second phase of a 69-story tower that will include 528,000 rentable square feet and 10,000 square feet of ground-floor retail space. Community amenities will include a pool, a fitness center and coworking spaces.

Rockpoint, Urby and Newmark did not return requests for comment.—Andrew Coen

A joint venture between Lincoln Property Company, Saber-Hightower and Waterfall Asset Management has sealed $177.25 million of acquisition financing for the purchase of two multifamily properties in the New York metropolitan area, Commercial Observer has learned.

Affinus Capital provided the debt package for the sponsorship’s purchase of the 262-unit Edgewater Harbor property in Edgewater, N.J., and the soon-to-be completed 147-unit Trilogy Lofts at Tuckahoe project in Yonkers, N.Y. The deal involved a $124 million loan for Edgewater Harbor and $53.4 million of acquisition debt for Trilogy Lofts.

The joint venture involving Lincoln Property Company, Saber-Hightower and Waterfall Asset Management acquired both properties from National Resources as part of a $450 million acquisition of four tri-state region properties encompassing more than 4 million square feet, CO previously first reported.

“Edgewater and Trilogy Lofts represent a compelling opportunity to invest in high-quality, well-located multifamily assets in supply-constrained, transit-oriented submarkets with durable renter demand,” David Greenburg, managing director at Affinius Capital, said in a statement. “Waterfall Asset Management, Lincoln Property Company and Saber-Hightower bring institutional scale, local market expertise, and a proven track record of value-add execution that positions this portfolio for long-term performance.”

Cushman & Wakefield negotiated the financing with a team consisting of John Alascio, Alex Hernandez, Brad Domenico, Chuck Kohaut and Mitch Rothstein. C&W also represented the seller in the acquisition with a Northeast capital markets team of Andy Merin, Frank DiTommaso and Ryan Dowd.

Located at 45 River Road six miles from Midtown Manhattan, Edgewater Harbor

The 147-unit Trilogy Lofts in Tuckahoe, N.Y., currently under construction, and Affinius Capital’s David Greenburg. features 60,500 square feet of retail space anchored by a Sprouts Farmers Market slated to open in 2027. Community amenities include fitness centers, rooftop decks, coworking space and an outdoor pool.

Trilogy Lofts at 1 Scarsdale Road, one block from the Tuckahoe Metro-North train station, features 97 apartments completed in April 2026 with another 50 units also planned. The property’s amenities include a fitness center, a golf simulator and coworking space.—A.C.

COURTESY OF AFFINIUS CAPITAL

Rockpoint and Urby’s 748-unit development.

Affinius Capital Lends $177M for Multifamily Asset Acquisitions in New Jersey, Yonkers

COURTESY OF AFFINIUS CAPITAL

COURTESY OF ROCKPOINT

ROCK(POINT) ON!

Citadel Care Centers Lands $51M to Build Skilled Nursing Facility in North Miami Beach

Citadel Care Centers broke ground on a skilled nursing facility in North Miami Beach, Fla., after securing a $50.9 million loan, property records show.

The financing from PNC Bank covers a 3.2-acre site, occupying a full block at 1875 and 1800 Northeast 167th Street, adjacent to Northeast 19th Avenue, about three miles south of Aventura. The new development will rise four stories and include a parking garage.

It’s unclear whether the existing

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50,088-square-foot Aventura Plaza Rehabilitation & Nursing Center, which occupies about half the parcel, will remain. A representative for New Yorkbased Citadel Care Centers could not be reached for comment.

The financing comes as Florida’s senior population is expected to grow about 4 percent annually through 2030, according to Colliers. Occupancy in senior housing properties has stabilized to just over 90 percent in

the first quarter of 2026, up from roughly 80 percent five years ago.

Sales of assisted living facilities have ticked up in recent months.

Earlier this month, PGIM Real Estate sold a 7-acre property in Delray Beach for at least $140 million, marking one of the priciest South Florida retirement home sales in recent years.

Healthpeak Properties bought a 136-unit facility in Boynton Beach for at least $62 million, also this month.—Julia Echikson

COMMERCIALOBSERVER.COM | SEPTEMBER 1, 2026 | 9

Fifth Third, CB&T TruAmerica Lend $124M on Bay Area Apartments Build SHAC Apartment Communities has landed $123.5 million of construction financing to build a multifamily project in the San Francisco Bay Area, Commercial Observer has learned.

Fifth Third Bank and California Bank & Trust (CB&T) provided a $96.5 million senior construction loan for the developer’s planned apartment community in San Carlos, Calif.

TruAmerica Multifamily also closed a $27 million preferred equity investment to support the six-story San Mateo County development, which is slated to commence construction soon.

The deal marked TruAmerica Multifamily’s first preferred equity financing since launching a structured finance platform last year.

The new business vertical was formed following the addition of Ash Baraghoush, head of TruAmerica’s structured finance group, after he spent nearly a decade at Pacific Urban Investors.

“This really goes hand in hand with the firm’s transformation into being a residential investment management company and being able to speak throughout the entire capital stack as opposed to just being owner operators,” Baraghoush told Commercial Observer.

“We have spent a good year-plus cultivating new relationships.”

Located at 11 El Camino Real 24 miles south of Downtown San Francisco, the project will feature 251 apartments with 38 of the units designated as affordable housing.

Baraghoush said San Carlos has plenty of tailwinds as a multifamily market given its close ties to the San Francisco Bay Area’s technology and life science industries. He noted that the San Carlos submarket has a 97 percent multifamily occupancy rate and the region has experienced double-digit rent growth.

“The Bay Area as a market has certainly outperformed and is perhaps one of the one of the better performing markets in the nation right now driven by return to office and driven by the AI boom,” Baraghoush said. “The need for affordable workforce housing continues to remain and that’s one of the attractive natures for this opportunity.”

Doug McDonald, president of SHAC, formerly known as SummerHill Apartment Communities, said in a statement that the project will provide “much needed new housing in San Carlos and the wider Bay Area.”

Fifth Third Bank and CB&T did not return requests for comment.—A.C. 10 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

DO Capital Group has sealed $50 million of construction financing to develop a mixed-use master-planned community in Jurupa Valley, Calif., Commercial Observer has learned.

BHI supplied the loan for the developer’s 239.2-acre The District at Jurupa Valley project in Southern California’s Inland Empire that will feature residential, retail, hospitality and logistics elements, as well as a business park and public parkland. Developers broke ground on the project June 4.

“We specialize in structuring financing for complex, large-scale commercial real estate projects, and The District at Jurupa Valley exemplifies the kind of project we’re equipped to support,” Brian Jurczak, first vice president, commercial real estate lending at BHI, said in a statement.

Located 50 miles east of Downtown Los Angeles, The District at Jurupa Valley development will consist of nearly 1,200 housing units, a shopping center with restaurants, and a 122-room Woodspring Suites hotel, The Press Enterprise previously reported. Bridge Logistics Properties also acquired more than 68 acres of the site for an industrial facility.

Matthew Dugally, co-founding principal at DO Capital Group, said in a statement that the loan from BHI “has helped lay the foundation for a destination that will create new opportunities for residents, businesses, and the broader Jurupa Valley community for years to come.”—A.C.

CITY OF JURUPA VALLEY

A rendering of 11 El Camino Real.

BHI Provides $50M Construction Loan for SoCal Inland Empire Development

A map of The District at Jurupa Valley project planned for California’s Inland Empire.

Banyan Street, Independencia Refi South Florida Office With $54M Loan Banyan Street Capital and Independencia Asset Management have nabbed $53.5 million to refinance an office complex in Doral, Fla. Wells Fargo provided the financing that backs the 290,000-square-foot Doral Center property.

The 10.8-acre campus includes two buildings — one rising six stories and the other seven — at 3750 Northwest 87th Avenue and 8750 Northwest 36th Street in the Miami suburb.

Doral Center, built between 1985 and 1990, is about 85 percent leased, according to CBRE,

whose Amy Julian and Andrew Chilgren brokered the debt. Tenants include coworking operator Quest Workspaces, which leases about 38,000 square feet.

The owners have spent $15.5 million updating the asset since buying it for $43 million in 2020 during the height of the pandemic. The 2020 sale price was about $4.3 million less than what the property had traded for four years earlier, according to property records.

“The extensive capital improvements have completely transformed Doral Center into a

premier workplace environment,” Julian said in a statement. “This strategic repositioning, combined with South Florida’s robust economic fundamentals, has enhanced the property’s competitiveness and triggered an immediate surge in leasing activity.”

This January, the joint venture sold about three acres for $6 million to residential developer ROVR Development.

A representative for Banyan Street Capital and Independencia Asset Management did not respond to a request for comment.—J.E.

CLOCKWISE FROM TOP LEFT: COURTESY OF CBRE

RENDERING COURTESY OF KTGY

FINAN C E

CBRE’s Amy Julian and Andrew Chilgren and the 290,000-square-foot Doral Center office complex at 8750 NW 36th Street in Doral, Fla. BECOME A COMMERCIAL OBSERVER MEMBER | JOIN AT COMMERCIALOBSERVER.COM/MEMBERSHIP

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ChartFinance Forbearances, Modifications Carry Weight in Latest Data

By Liam Mulcahy CRED iQ tracked 82 modified commercial mortgage-backed securities (CMBS) and commercial real estate collateralized loan obligation (CRE CLO) loans with a combined $2.36 billion in outstanding balance from May through July 2026. The mix looks different than it did a few quarters ago as “extend and pretend” hasn’t disappeared, but it’s no longer the whole story.

Forbearances and combination modifications are now carrying meaningful CREDIQ weight alongside straight maturity extensions, and the balance is concentrated in midsize loans rather than mega-loans. The property type with the most modifying isn’t hotels or office anymore — it’s multifamily.

Of the $2.36 billion modified during the period, maturity date extensions remained the single largest category: 21 loans totaling $802.5 million, or 34 percent of modified balance (25.6 percent of the loan count). Forbearances followed at 15 loans and $514 million (21.8 percent of balance), while combination modifications — deals pairing an extension with other relief, such as a paydown, rate adjustment or reserve requirement — accounted for 10 loans and $345.6 million (14.7 percent of balance). Of the remaining 36 loans, $695.4 million (29.5 percent of balance) fell into other or miscellaneous modification categories.

Taken together, extensions, forbearances and combination mods — the categories most closely associated with lenders buying time on distressed collateral — made up 70.5 percent of modified balance this period, down from the near-universal “extend and pretend” theme of recent reports. Lenders appear to be reaching for a broader tool kit than a simple maturity push.

Multifamily loans led modification activity by a wide margin, a shift from the hotel- and office-driven distress of previous quarters: Multifamily: 35 loans totaling $1.14 billion (48.4 percent of modified balance) Hotel: 15 loans totaling $493.8 million (20.9 percent) Retail: Six loans totaling $236.7 million (10 percent) Office: 17 loans totaling $226.2 million (9.6 percent) Mixed-Use: Five loans totaling $160.5 million (6.8 percent) Other: Three loans totaling $67.6 million (2.9 percent) Industrial: One loan totaling $31.2 million (1.3 percent) Multifamily’s rise to the top of the modification table is notable given the sector’s reputation for relative stability earlier in the cycle. Rate resets on floating-rate loans and slower rent growth in oversupplied metros appear to be catching up with borrowers who

12 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

underwrote to more favorable financing conditions. Hotel remains a source of distress, at roughly one-fifth of modified balance. Office, long the poster child for CRE distress, accounted for less than 10 percent of modified balance this period — a smaller share than either multifamily or hotel.

Modifications by loan size Unlike the prior report, where loans of $100 million or more drove the bulk of modified balance, midsize loans dominate this period: Less than $10 million: 16 loans totaling $28.8 million (1.2 percent) $10 million – $20 million: 18 loans totaling $275.1 million (11.7 percent) $20 million – $50 million: 38 loans totaling $1.22 billion (51.7 percent of modified balance) $50 million – $100 million: Eight loans totaling $554.3 million (23.5 percent) $100 million plus: Two loans totaling $280.0 million (11.9 percent) Loans of $50 million and above make up 35.4 percent of modified balance, but the majority of activity — both by count and by dollars — now sits in the $20 million to $50 million range. The average modified loan balance was $28.7 million. The median was $23.1 million, reinforcing that this period’s distress is showing up in the broad middle of the market rather than in a handful of trophy-asset workouts.

The May-to-July 2026 data points to a modification landscape that’s broadening rather than concentrating. Multifamily has overtaken hotel and office as the property type generating the most modification activity, a reminder that distress rotates across sectors as financing conditions and local fundamentals shift. The loan size distribution has also flattened: Rather than a small number of massive loans accounting for most of the dollar volume, midsize loans in the $20 million to $50 million band now carry the largest share of modified balance. And the modification tool kit itself looks more varied, with forbearances and combination structures closing the gap on the maturity extensions that once defined “extend and pretend.”

None of this means distress has eased — $2.36 billion in loans needed some form of relief over three months, and more than 70 percent of that balance came in the form of extensions, forbearances or combination modifications built to buy borrowers time. But the shape of that distress has changed, and lenders and borrowers alike appear to be working from a wider set of options than a maturity date extension alone.

Liam Mulcahy is senior product manager for CRE data and applied AI at CRED iQ.

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FI NANCE

The Takeaway Data courtesy of

The number of mortgages filed with the New York City Department of Finance dipped 16.11 percent in July to 724 compared with 863 in June. The decrease was seen in every property sector with the exception of industrial, which rose 25.93 percent month-over-month, and mixed-use-retail (a 18.79 percent monthly increase). Financings for commercial condos experienced a 71.43 percent drop to just four in July compared with 14 in June. Multifamily properties saw a 30.05 percent monthly drop to 305 from 406. Loans on hotels fell 47.93 percent to 12 from 23 the previous month. Transactions for office assets went down 10 percent to 45 from 50.

Refinances vs. Purchases The number of refinances were nearly triple purchases in July.

639 REFINANCES

JUNE

Top Lenders J.P. Morgan remained New York City’s most active commercial real estate lender with 91 loans in July. Customers Bank ascended to the second place spot with 25 financings. Habib American Bank, Provident Bank and Webster Bank tied for third place with 15 deals each in July.

BANK

JUNE

BANK

JULY

J.P. Morgan Chase

106

J.P. Morgan Chase

91

Ridgewood Savings Bank

17

Customers Bank

25

Cathay Bank

16

Habib American Bank

15

NCB

16

Provident Bank

15

Customers Bank

14

Webster Bank

15

Ponce Bank

13

Wells Fargo

14

Woori America Bank

12

East West Bank

12

Wells Fargo

12

Cathay Bank

12

Habib American Bank

11

Ponce Bank

11

Broadview Capital

10

Valley National Bank

10

Maspeth Federal Savings & Loan

10

Citizens Bank

10

Cross River Bank

10

NCB

10

JULY

530

Most Active ZIP Codes Financing

224 PURCHASES

JUNE JULY

The most active New York City ZIP codes were largely clustered around Brooklyn.

194 0

100

200

300

400

500

600

700

800

Total Sales by Borough New York City investment sales were down in July in every borough except Queens. (Staten Island is not tracked).

ALL

MANHATTAN

BRONX

BROOKLYN

QUEENS

367

JUNE

330

JULY

75 55

JUNE JULY

64 39

JUNE JULY

ZIP CODE

JUNE

ZIP CODE

JULY

11217

23

A

11207

21

11221

19

B

11221

19

11215

19

C

11211

18

11207

18

D

11223

16

11213

17

E

11215

16

11226

17

F

11385

15

10458

17

G

11220

15

11238

16

H

10003

12

10003

16

I

11222

12

11691

16

J

11206

12

I H C J

F

B E A

G

140 134

JUNE JULY

88 102

JUNE JULY

0

50

100

150

200

250

300

350

400

J.P. Morgan closed a $163 million loan to build affordable housing units at 178 Montrose Avenue and 73 Meserole Street in Brooklyn.

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D

COMMERCIALOBSERVER.COM | SEPTEMBER 1, 2026 | 13

P OWER P L AYER S

Camp David GreenBarn Investments’ David Welsh and David Schonbraun lean into complex financings and workouts — and are having fun doing it

BY CATHY CUNNINGHAM PHOTOGRAPHS BY EMILY ASSIRAN

lot happened in the world in 2020: some bad, some ugly but also some good. Amid the tumult and upheaval came some new shoots — “green” ones, so to speak — and, a few years after that, a pairing of two industry veterans.

David Welsh co-founded Normandy Real Estate Partners, an investment firm primarily focused on the Northeast, in 2002. After selling Normandy to Columbia Property Trust in 2019, he co-founded a new company, Senlac Ridge, with two of his Normandy partners in January 2020.

David Schonbraun spent almost two decades at SL Green Realty as the office ownership giant’s chief investment officer, departing in 2021, before becoming Carlyle Group’s U.S. head of real estate credit.

By 2023, Schonbraun opted for a different shade of green. Welsh bought out his two Senlac partners and rebranded the company to GreenBarn Investment Group, bringing in Schonbraun as his partner at the firm and Rithm Capital as a partner in its business.

Three years later, GreenBarn has roughly $3.5 billion in investments under its belt and is carving out a

14 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

niche for itself in a crowded market, one led by experience and the ability to tackle complex deals across sectors, as well as up and down the capital stack.

If the GreenBarn name sounds familiar, you’ve likely heard about the firm’s myriad deals, from the restructuring of the $1.84 billion in debt on a Columbia Property Trust (CXP) office portfolio; to the recapitalization of 817 Broadway; to the $77 million mezzanine loan for Grubb Properties’ development at Manhattan’s 8 Carlisle Street; to the $112 million retail loan on Kushner Companies’ Monmouth Mall in New Jersey; to being awarded asset management duties at 20 Times Square.

In short, its portfolio is anything but vanilla.

“The hairier the deals, the better for us, because we feel very comfortable with complexity,” Schonbraun said during a July interview. “We’re happy operating where others shy away. We look at these deals from an owners and operators perspective, and our comfort with complexity is what gives us an advantage.”

The ability to handle complexity isn’t asset classor sector-specific. “I think that’s the great thing about them,” said Michael Magner, the managing director at Natixis who hired GreenBarn for the 20 Times Square assignment. “There’s nothing they haven’t seen, and nothing they can’t tackle.”

That truth is born out of Schonbraun and Welsh’s experience but also somewhat intentional as they

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David Welsh (left) and David Schonbraun.

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P OWER P L AYER S

continue to craft and grow GreenBarn’s portfolio.

“We’ve always believed that the best real estate companies are those that are multifaceted, and can operate, understand the capital structure, play around that capital structure, and also know how to do workouts,” Schonbraun said. “You want to be fluid in where you play in the capital stack, because the best risk-adjusted return moves over time, but wherever you invest you need an operating expertise to make the very best investment decisions.”

David squared Welsh and Schonbraun weren’t strangers when the two teamed in 2023. They live roughly 15 minutes apart in New Jersey — in New Vernon and Short Hills, respectively — but had worked together as partners on deals for two decades during their tenures at SL Green and Normandy. Schonbraun oversaw SL Green’s debt book, and Normandy was a borrower. The two also often partnered on loan workouts.

“We’ve always had a shared vision of the industry and how we look at things,” Schonbraun said.

That shared vision became especially crucial when the two joined forces in 2023 because the market was changing — fast — and indecision wasn’t an option. Interest rates were going up, and there was plenty of capital markets distress, but, where others saw dislocation, Welsh and Schonbraun saw opportunity.

“We felt that the combination of David’s capital markets and lending expertise and my operating experience and building a business through Normandy would be a great recipe for the market at the time,” Welsh said.

When Welsh founded Senlac Ridge in 2020 he was under a noncompete agreement, with office investments off limits. So, up until 2023, Senlac focused its efforts on multifamily development instead, developing a number of projects in Florida, Greater Boston and the New York area. In 2023, the opportunity to get equity returns by investing in debt positions materialized, and with Schonbraun’s capital markets background lighting the fuse, GreenBarn was ready to take off.

“We started really leaning in and deploying a lot of capital, originating loans and buying nonperforming loans where there was going to be a need for intensive asset management, or a development deal where we would be using our development expertise to oversee the investment of the loan,” Welsh said.

Complex, opportunistic credit investments don’t fall in one’s lap, however. They need to be pursued.

“They’re good hunters,” Michael Nash, co-founder and (now retired) chairman of Blackstone Real Estate Debt Strategies, said of Schonbraun and Welsh. “You need to be a hunter when you’re starting your own firm. Some people are better waiting for the phone to ring and being supported by a great organization, but these guys don’t need that. They know how to take risks, and they’re likable people.”

In real estate, that last part is critical. “If they don’t like you — ‘they’ being the transactional world — it’s not a good thing,” Nash said. “But GreenBarn has people who want to help them, support them, show them deals, work with them, and capitalize their deals.”

Given Welsh and Schonbraun’s longevity in the industry, the majority of GreenBarn’s deal flow is driven by direct relationships rather than brokers, including relationships with several former competitors of SL Green or Normandy. Instead of competing with these firms today, GreenBarn is partnering with them as co-GPs, or lending to them.

In addition to deep relationships, GreenBarn’s ability to take on a multitude of scenarios in the market today gives the firm a competitive advantage over some of the newbies who haven’t yet walked the walk.

“Being able to turn your hands to several different things in the market today is not a ‘want to,’ it’s a must,” Nash said.

“Everyone’s got key relationships that they rely on to make a difference. These guys are no different. They’ve been in the soup for a really long time doing this, but having capital structure expertise, having sector expertise and having vintage expertise goes a long way. You also need courage, because you have to believe 16 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

in what you’re chasing in the market more than someone else does. Both these guys have courage.”

Office paper If GreenBarn were to slap a Ted Lasso-style “BELIEVE” sign on any asset class, it’d likely be office. It’s in both Welsh and Schonbraun’s DNA, and their career histories are filled with its, ahem, stories.

Even during the pandemic, when investing in the sector was considered to be as savvy as installing an ashtray on a motorcycle, the two knew a recovery was coming — and as a result were early movers in investing in that recovery.

One of the earliest deals GreenBarn completed was an investment in the $1.84 billion Columbia Property Trust (CXP) debt package, originated by Goldman Sachs, Deutsche Bank and Citigroup for PIMCO’s take-private acquisition of the real estate investment trust in 2021, comprising a roughly $484 million CMBS loan, $1 billion in pari passu financing, and some B notes.

The deal is collateralized by seven office properties in New York, Jersey City, N.J., San Francisco and Boston.

The three banks eventually sold their controlling stakes in the transaction to GreenBarn and Axonic Capital, which decided to lean in and improve the distressed portfolio’s performance and value rather than break it apart or liquidate it. Two modifications took place under GreenBarn and Axonic’s lead, the second pushed the debt’s maturity date out to 2028, put the debt back in good standing and kick-started a repositioning of the portfolio, with a local management firm being put in place at 650 California Street in San Francisco.

“The CXP transaction is probably the most notable one that we have on our plate right now,” Welsh said. “Because it was the Columbia Property Trust portfolio, we knew these assets well and we know the people operating those buildings. We’ve been working on this deal for over a couple years now and we’re reinvesting capital into this portfolio as if we are the owner. We bought the position with the idea to not just liquidate the portfolio, but to reinvest capital into these assets, particularly in San Francisco and the New York assets, where we see an opportunity to reposition these assets, upgrade the assets, and drive leasing.”

Erik Nygaard, a principal and portfolio manager at Axonic, was introduced to Welsh through his brother Aaron Welsh, a

partner at Apollo Global Management, through Nygaard’s wife, JLL’s Lauren Kaufman. “It was a case of ‘This is the Nygaards and we’re the Welshes’ — a true family affair,” Nygaard said. “That was the initial connection, but, over the last three years, we’ve closed five deals with GreenBarn, all with complicated capital stacks or deal structures.”

Axonic initially started out as competitors on the CXP deal, bidding alongside Skylight Real Estate Partners. “We had done a ton of work on it, and so when GreenBarn secured it they reached out to us [to come in],” Nygaard said. (Later, GreenBarn, Axonic and Skylight would all team up on 8 Carlisle Street’s mezzanine loan along with Meadow Partners.)

GreenBarn’s relationship with Goldman Sachs was key in facilitating the CXP deal, with Nygaard saying: “[Welsh and Schonbraun] cover a really wide swath of the market between the two of them in terms of relationships that they have.”

Typically, Axonic’s transactions with GreenBarn take a GP-LP format in which GreenBarn is managing the asset’s day to day, Nygaard said: “I think the reason we have a good partnership with them — in addition to the fact that we get along personally — is that we all bring something slightly different to the table on these complicated structured deals.”

When it came to the CXP deal, Axonic brought plenty of CMBS expertise to the table, as an active participant in the market and having done a lot of distressed CMBS investing post-Global Financial Crisis. “We have an extensive track record working out these types of deals and utilizing the nuances of the structure and relationships with the counterparties within that ecosystem,” Nygaard said. “I think they viewed us as a partner who was additive to the workout of the deal and the outcome of the deal, in addition to bringing capital.”

Elsewhere in office, in 2025, GreenBarn, alongside FarmView Ventures and Farallon Capital, acquired the 405,000-square-foot building at 1625 Eye Street in Washington, D.C., via foreclosure auction with a credit bid of $60.5 million. The deal was done with an intention to stabilize the property and reset its basis for a next chapter.

One investor who co-invests alongside GreenBarn but couldn’t speak on the record said distressed office sits right in the firm’s wheelhouse: “Nobody knows office better from an operations perspective,” they said. “In concept, restructurings

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number of letters of intent for the space that it’s currently exploring. “We’re adhering to the old carpenter’s rule of measure twice, cut once as we want to get it right,” Magner said. “We’re looking at different pieces of the puzzle — maybe one big tenant, maybe two tenants — but prior to GreenBarn’s involvement, I didn’t even have those conversations.

“This is maybe more of a cliche statement, but I think they’re small enough to care, but big enough to matter,” Magner said of Walsh and Schonbraun’s special sauce. “Both Daves are, for me, a phone call away. It’s a different kind of connectivity. I did not need or want somebody who just would — and I’m going to use my fingers to air quote — ‘asset manage.’ I needed value creators.

Both those guys sit in the seat as if it were their own asset. That’s what I really like about them.”

Nygaard also noted the benefit of a direct line to Welsh and Schonbraun when a deal comes calling. “They’re nimble and they’re able to move quickly because they’re the decisionmakers,” he said. “That’s definitely been very beneficial for them in terms of pursuing deals that require speed.”

‘Putting all the mercenary bullshit aside, you want to enjoy the experience of working on deals.’ are easy, but the reality is there are just so many different motivations and intentions, and it’s really hard to keep all the pieces together. Welsh is a master at understanding motivations and finding a solution. And Shonbraun is one of the smartest, straightforward guys you can meet.”

Lastly, and notably, when Rithm Capital acquired Paramount Group for $1.6 billion last year, GreenBarn had discussions around participating in the management of the Paramount business after closing. Ultimately, the two firms mutually decided to keep the two businesses separate. “It was a Rithm opportunity that Rithm wanted to pursue on their own,” Welsh said. “They made a great buy at the right time, and we were very involved with the acquisition. We had many discussions about staying involved with this opportunity while continuing to manage GreenBarn’s business. In the end, we decided to focus on GreenBarn and GreenBarn’s business only, because it was going to be really difficult to do both. It’s a very good collection of assets, but that in and of itself is a full-time job.”

Welsh added that “Rithm has a terrific team running these assets, we have a great relationship with them, and we remain partners together in our investment portfolio.”

GreenBarn is keeping plenty busy with other asset management assignments, including the Bridge at Collegeville, a 14-building, 1.8 million-square-foot office campus near Philadelphia being redeveloped by David Werner Real Estate Investments and GreenBarn, and also with 20 Times Square.

Times to shine After leading a $2 billion financing package for 20 Times Square, which includes the Times Square Edition Hotel, retail space and a 18,000-square-foot billboard, Natixis was forced to foreclose on the property in 2022 and found itself in the owner’s seat. Michael Magner, a managing director at the bank, was placed in charge of the property, and his search for an asset

management firm — one with property management, leasing and capital markets experience —commenced.

Having known Welsh for some time, Magner mentioned he was about to go out to the market with an RFP. Welsh said GreenBarn would like to put its hat in the ring.

“They came back with an amazing presentation,” Magner said. “They have an ability to take the prism and just turn it a little bit to show a completely different light. That’s Dave Welsh’s background — he’s built and developed Class A properties but he’s also bought and restructured a lot of distress, and he understands what it takes to take something and make it look different and feel the way it should.”

The message in GreenBarn’s presentation was: This asset is in a great location. It’s got great bones and enormous visibility on 47th and Seventh. We just have to get people to look at it differently. “That’s what we’ve been doing ever since,” Magner said.

Cracking the retail leasing was the biggest hurdle for 20 Times Square to overcome. The NFL Experience store previously occupied the retail space and left it in some disarray. But, under GreenBarn’s management, retail leasing activity has picked up.

When Magner initially walked the NFL space with Schonbraun and Welsh, the first thing they said to him was, “Mike, why hasn’t anybody white-boxed the space?” Whiteboxing — cleaning everything out, removing every single temporary partial wall and everything that looks like it was the prior tenant’s fixtures — is similar to staging a home for sale, but it hadn’t been done at 20 Times Square.

“Imagine if you walked into a house for sale and there were kids’ toys across the floor and a sink full of dishes. That’s the way it felt when you walked in there,” Magner said. “Now, it’s clean and crisp. We walk in there with very substantial tenants and they love it.”

Working alongside GreenBarn and a Cushman & Wakefield team of Alan Schmerzler and Steve Soutendijk, Natixis now has a

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Shoes on, shoes off Nash described GreenBarn’s platform as “special sits or tactical ops.” That’s not to say they’re not affable while completing complex and sometimes covert missions.

“Newer firms have to prove that they’re trustworthy, good fiduciaries and good people to work with,” Nash said. “Putting all the mercenary bullshit aside, you want to enjoy the experience of working on deals. I’ve done a lot of deals with people where I never wanted to do a second deal with them again. For a new firm, they’re off to a very good start in that regard.”

As the co-investor put it, “These guys are very well positioned between their expertise at the asset level combined with their know-how on the capital structure, and also just their personalities. When you’re negotiating against them, they also do a really nice job of good cop-bad copping you.”

Welsh and Schonbraun have some well-known side hobbies when they aren’t hunting their next deal. Welsh is an accomplished pianist and plays in a band called the Holiday Ramblers.

His band started practicing, and recording, in the green barn on his property, which his company is now named after. During COVID, Welsh often sat in that barn and pondered leaving real estate and pursuing music full time. “In the end, I realized I had unfinished business to do and wasn’t ready to give up real estate, and that I could be successful building a new company without giving up music,” he said. (Holiday Ramblers’ current favorite jam? “The Way It Is” by Bruce Hornsby.)

“Dave Welsh’s happy place is on a fishing boat in Montauk, and so he’s got more of that flip-flop, Montauk personality in him,” Nygaard said. “GreenBarn does a fishing trip every fall out in Montauk. They host 80 or so people, and Welsh plays with his band at dinner.”

Schonbraun, on the other hand, is an accomplished athlete who played tennis at Princeton, and still plays today.

For Welsh and Schonbraun, the GreenBarn days are keeping them busy and continue to just get better and better.

“I haven’t worked like this since the early days of Normandy where I was involved with every aspect of the transactions and, at the same time, building a business,” Welsh said. “Back when I started Normandy, I was disappointed when it was Fridays and looked forward to Mondays.

That changed at the end as I started my family and had other priorities, but now with my kids growing up, and this new chapter, it feels the same all over again. I don’t like Fridays, and I can’t wait for Mondays.”

Schonbraun echoed the sentiment — with a twist. “David built Normandy, but I haven’t had that experience until now as there’s always been a larger institution behind me,” he said. “For me, the investing side of it’s easy, but growing the business and all of that has a lot of complexities that I’m learning, and it’s a lot of fun, and it’s gone as well as I think we could have imagined three and a half years in. We work really well together. The market’s set up well for us, and we’re positioned for a strong future.”

COMMERCIALOBSERVER.COM | SEPTEMBER 1, 2026 | 17

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Q&A

BY ANDREW COEN he commercial mortgage-backed securities (CMBS) market is on track to exceed issuance expectations in 2026, with single-asset, single-borrower (SASB) deals driving the reassessment.

With more than $90 billion of CMBS volume scheduled to close through early September, the market is on pace to reach nearly $140 billion by the end of the year, according to analytics firm Trepp, which initially predicted $130 billion of activity in 2026. The CMBS market has been on the rebound in the last two years, with $126.6 billion of the debt vehicle issued in 2025, up from $108 billion for 2024.

Trepp’s Stephen Buschbom, head of its applied research and analytics, and Andy Boettcher, head of research, met with Commercial Observer on Aug. 20 to discuss the latest trends in the CMBS market.

This interview has been edited for length and clarity.

Commercial Observer: So far in 2026 we’ve seen strong CMBS volume coupled with rising distress. How do you view the market so far? Has any of it surprised you?

Stephen Buschbom: The distress by nature has a long tail. If we look back at the `08 crisis we really didn’t reach peak delinquency until four years after AIG and Lehman Brothers, and it’s more or less playing out in a similar manner this time around.

COVID was a very different mechanism and different shock, but the completely different paradigm shift for office that we live in now is going to take a long time to play out just because of the nature of the leases. As those leases roll and companies continue to reevaluate their space needs, that stress will continue flowing through the market.

Our best guess back in 2022, 2023, 2024 was that we thought by 2026 we would hopefully see some sort of stabilization or normalization in the market so that lenders would gain confidence and transaction volumes would begin picking up again. That, fortunately, has turned out to play out more or less as we had kind of hoped.

In general, from a 50,000-foot level, 2026 CMBS issuance volumes have been fantastic, 18 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

but what’s been very interesting to see is that the mixture is much different than it was pre-COVID. We were already tilting heavier toward the SASB end of the market post-Global Financial Crisis (GFC), but then over the last couple of years SASB has really been the dominant origination channel. This year, of the roughly $92.6 billion in CMBS private label issuance that’s been announced, 75 percent of that, or about $69 billion, has been in singleasset, single-borrower transactions.

What’s driving that big disparity with SASB versus conduits?

Andy Boettcher: On the buyer side, whether that’s a pension fund or a bank that’s required to hold triple-A’s, the SASBs enable them to build the portfolio that they want. If they want to be overweighted to New York or if they want to be underweighted to New York, they can do that way more efficiently in their portfolio management systems with SASB than they can through the conduit channel.

There’s a buyer incentive of what kind of paper that they want to hold. It makes banks way more comfortable in terms of how they want to manage their risks that they’re taking with their direct exposure versus their securities exposure. The SASBs enable them to be way more pointed with where they’re taking their credit risk versus a conduit channel.

During the last couple of years, CMBS SASB investors have shown increased bullishness for Class A trophy properties. How would you describe CMBS investor appetite now for Class A-minus or Class B office buildings?

Buschbom: It’s been lukewarm at best. I’ve wanted to see more of a trickle-down effect for both space demand and asset owner appetite. We haven’t seen it, really, enough in either for me to feel better about A-minus or B-plus space. The demand has picked up a little bit in the margins, but not in the B-plus space and more in the A-minus, the stuff that has a path forward to justify the capital needed to renovate the space and keep it operating at that very high-level A-minus space.

If we were to break it down in tiers 1, 2, 3 and 4, tier 2 maybe on the margins might be seeing

environment. There is plenty of liquidity to handle all of the CMBS maturities and rollover and whatever is happening on the CMBS side because banks are going to be the most riskaverse lender in that group.

a little bit of benefit and a little bit of a lift, but tier 3 and 4 still is largely orphaned.

Data centers have been a huge part of the CMBS market for the last couple of years.

There has been some pushback on data centers and AI in general lately. Is that showing up in some of the recent CMBS numbers?

Buschbom: It’s difficult to tease that out and say how much of the widening and spreads has been related to sentiment and broader sector concerns versus an idiosyncratic supply wave.

We saw three deals get priced in June and July in very quick succession. In the past, the data center deals tended to be spaced out more, and you would get one at most once every month, but typically it was every two to three months.

So, to have three deals come in such a short period of time, you had subscription issues. The spread widening was notable from the market.

COURTESY TREPP (2)

Commercial mortgage-backed securities issuance is expected to exceed initial 2026 projections

Andy Boettcher (l) and Stephen Buschbom.

Andy, you previously studied credit conditions on the banking side at the Federal Reserve. What does the bank balance sheet lending climate say about CMBS now?

Boettcher: The banks’ commercial real estate exposure reprices more frequently than the CMBS exposure does, so the distress or stress measures that get observed at the bank side come through much quicker than they do on the CMBS side. The banks have largely reserved and healed for their commercial real estate exposure specifically, so they’re going to be more guns blazing. And they have been pulling 3 percent growth, which is a really healthy number because it’s 3 percent on $3 trillion [the volume of CRE bank balance sheet loans].

If they are growing at 3 percent, that means all of the conduit lenders or the sponsors for the SASB deals have the same liquidity

Given the higher-for-longer interest rate climate, do you think we will see five-year, fixed-rate, pooled CMBS loans offered by some of the big investment banks in the last few years become the new normal instead of traditional 10-year loans?

Buschbom: It doesn’t feel like we’re going to go back to 10-year anytime soon. I keep wondering if and when that shift will start going up, but the 10-year duration just has not had much of an appetite either on the borrower side or the bond buyer side. It feels like we’ll be continuing to see this five-year duration be the norm for at least another year.

Boettcher: I’m more bearish than Stephen is on when it’s going to come back because I think it’s going to take 10 years of realizing that the Fed funds rate is not zero and that a normal Fed funds rate is in the 3 to 5 percent range and that a normal 10-Year Treasury is in the 4 to 6 range and the 30-Year is in a normal 5 to 7 range. That is where it has been for a very, very long time, prior to 2001 when we smashed the Fed funds rate way down from 9/11 and the tech burst and then post-GFC. I’m more in the camp of we’re talking 2030, 2031 before someone decides they have done two five-year loans and it hasn’t really changed, so they can do another 10-year loan.

What is your projection for the remainder of 2026 with CMBS issuance?

Buschbom: As long as we don’t have any crazy spike in volatility, the trajectory will be linear.

When you look historically at how issuance has trended, absent any major disruption, it tends to follow a very, very linear path and the momentum carries. Right now, through August, we have approximately $91 billion in private label CMBS issuance scheduled to close, so that’ll put us at a little over $136 billion for the year, and that seems very much in line with what we’ve been hearing from all of the major issuers. They were expecting private label issuance to be right around that $135 billion to $140 billion total they were projecting early in the year.

I have no reason to think that we’ll fall dramatically short of that. If anything, it feels like we could break to the positive, and maybe exceed $140 billion from our annualized target right now of $136 billion.

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Backed Against the Maturity Wall Commercial mortgage-backed securities distress is set to peak before the end of the year. Is that a crisis in waiting, or an opportunity?

BY PATRICK SISSON 20 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

iscussions around distress that have dominated the commercial mortgage-backed securities (CMBS) market have taken a turn for the worse, with data points shifting in the same unfavorable direction for months.

The distress rate has steadily trickled up, approaching a peak, with office distress hitting an all-time high of 8.89 percent in July with another maturity wall nearing. Analytics firm Trepp found that, of the $65 billion in CMBS loans set to mature by the end of 2026, $37 billion are hard maturities with no extension options. An analysis from records cruncher PropertyChecker found hard maturities will hit especially aggressively in the latter half of the year. Some 39 percent of the year’s hard maturities fall in the fourth quarter.

Still, while the facts seem clear, there isn’t exactly agreement on the significance. Some in commercial real estate find solace in more aggressive actions to resolve loans, and remain optimistic that everything will work out, aside from a handful of troubled loans. Trepp even said in a recent report that the maturity wall is really more akin to “specific pockets of refinance pressure.”

Others see ominous storm clouds on the horizon, ones

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AFP VIA GETTY IMAGES

‘There’s a better understanding that lower rates are not going to bail out loans that don’t make sense.’

growing more dangerous due to larger economic distress.

There’s “nothing systemic to worry about,” said Mike Haas, founder and CEO of CMBS tracker CRED iQ, who argues the market is both healthy and supportive of new deal activity.

Mark Silverman, partner and CMBS special servicer team leader at law firm Troutman Pepper Locke, doesn’t think the sky is falling, but it’s “adjacent to Chicken Little” because the volume of maturities is too significant to ignore. While he doesn’t expect a “terrible tsunami” of issues, he can’t see how the market collectively sidesteps this particular 2026 maturity wall.

“You have bad underwriting at origination deals, and then you have market-driven problems,” said Silverman. “Those are just naturally going to coincide and hit at the same time.”

The diversity of opinions on the overall health of CMBS stems in part from the market’s own diversity, what many have described as a bifurcation. Analysts and experts, such as Liza Crawford, co-head of global securitized at asset manager TCW Group, have long spoken of that bifurcation in the market, both in terms of existing loans and originations.

Many optimists point to the fact that new loan activity is through the roof. Trepp has tracked $76.2 billion of CMBS

origination from the start of the year through the end of July, $58 billion of which is related to single-asset, single-borrower (SASB) loans. Originations, said Crawford, have trended away from conduit loans to mostly SASB, a shift she attributes to an attempt to have more certainty and control over risk, as well as a need to be nimble to capture what many investors see as growing opportunities.

Even some of the floating-rate loans coming to final maturity, which can be challenging to untangle due to interest rate shifts, can reach a negotiated extension, said Crawford. “There are still extension stories in the market,” she said.

“There’s a better understanding that lower rates are not going to bail out loans that don’t make sense,” Crawford added.

However, a significant number of loans are coming due later this year at a time when interest rates remain elevated and cash to refinance remains in shorter supply. Pessimists highlight a troubling overlap of problematic loans and continually poor property performance. Loss severities — the percentage of the principal balance lost via liquidation by a special servicer — continue to increase, which means more deals getting resolved for lower returns. A number of mall loans created and modified during COVID-19 are also coming due, said David Putro, ratings agency Morningstar’s head of commercial real estate analytics. That can worsen overall distress.

Following the slow, steady rise of real estate-owned properties, the number of bank modifications on these loans will dry up and stop happening, said Haas.

Another bifurcation is between office and multifamily assets in particular. Return-to-office policies and increased demand for Class B office help office-anchored CMBS assets on the bubble. At the same time, though, multifamily has struggled with stagnant operating incomes and a cacophony of rising costs. Loans originated between 2021 and 2023, based on rosy rental growth and operating cost projections, have been clobbered by a shift in multifamily fundamentals and now find themselves on the chopping block.

“There’s not going to be a sufficient number of lenders that are comfortable underwriting refis that make sense on a lot of these deals,” Silverman said. “That’s a cagey way of saying multifamily isn’t necessarily going to be underwritable on its face if the property fundamentals aren’t there.”

Underwritten with healthier rent growth, such as a 3 percent annual increase, these assets have endured years of flat rents, while costs like insurance skyrocket. Crawford said that of the 2023 vintage of multifamily CMBS, 24 percent are delinquent and about 27 percent find themselves in special servicing.

“In general, inflation has really crushed these multifamily assets,” said Haas. “Those with floating-rate loans taken out during record-low interest rates are feeling the pain the most.”

Office hasn’t escaped its own challenges, but the sector is showing much more health overall than one might have predicted a few years back, when remote work was regnant and vacancies stubbornly high. Leasing momentum, especially in AI-happy San Francisco and a resurgent Manhattan, has pushed demand into Class B properties and eased a potential

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CMBS distress situation, said Putro. There’s a cash flow story that appeals to lenders, even if realistically it depends on spending to renovate Class B space.

And, overall, Troutman Pepper’s Silverman observed, the market has found ways to repurpose, reposition, sell and transact office assets despite the distress. Nobody is getting unbelievable, bottom-of-the-barrel pricing on these assets, Silverman said. Instead, they’re getting average deals, and servicers aren’t getting crushed.

“The ecosystem is self-sustaining,” he said. “I think that’s what’s giving folks optimism.”

There’s still trouble, though. Haas predicts a number of monster losses on antiquated office space. Bond investors might even take a loss in some situations, and “that never happens.”

Also, the concentration of risk in second-tier and tertiary markets remains a heavy weight that can’t be undone easily.

There’s simply too much square footage and concentrated loan distress. These are markets with less volume, less experience with servicers, and less speed to develop, prolonging recovery and redevelopment, Silverman said.

An analysis from analytics firm Atrium found certain metros with significant struggles in terms of CMBS distress: Minneapolis (70.6 percent) and Denver (66.6 percent) lead the country, and most of Minneapolis’ distressed office CMBS loans are already real estate-owned (in other words, owned by the lender).

It isn’t news that the CMBS market is filled with uncertainty, and a lot of creative financing and deal-making will be needed to unwind these distressed assets. The positive case for CRE sees the slow, steady nature of extensions and modifications continuing to spread out the pain. CRED iQ’s Haas also points to the conventional banking sector, which has seen record profits and capital sitting on the sidelines, ready to do deals.

“Banks are pretty strong, and I don’t think they’re all going to blink at once,” he said.

But there’s always more trouble over the horizon. Atrium found $34.5 billion in office CMBS maturities hitting next year, including in New York ($8 billion), Boston ($3.7 billion) and San Francisco ($3.3 billion). Crawford believes that there isn’t massive, systemic risk, but she said there could be acute pain in some portfolios where investors and analysts aren’t paying attention to multifamily metrics in particular. Instead of looking under the hood closely, they may miss just how disjointed revenues and costs have become for certain challenged properties.

And then there’s the bigger worry of the overall economy, where consumer sentiment and spending continue heading in the wrong direction. Silverman said that if consumers continue to feel completely overwhelmed by inflation and stagnant incomes, that will reduce spending, slowly amping up pressure on properties that will eventually show signs of distress.

“If you can’t beat back inflation and you can’t otherwise solve some of these other macro problems,” he said, “how do you solve the micro problem of your loan maturing?”

COMMERCIALOBSERVER.COM | SEPTEMBER 1, 2026 | 21

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Extra Security Tax-exempt commercial mortgage-backed securities are having a moment as a vehicle for financing affordable housing

s the need for affordable housing in the U.S. grows, the tax-exempt commercial mortgage-backed securities (CMBS) market is emerging as a potential financing tool to deliver more homes. New federal rules and greater attention from ratings agencies and top-tier banks are helping the growth of the burgeoning structure.

Tax-exempt affordable housing securitizations have taken flight of late after years of largely flying under the radar, according to Ryan Paszczykowski, head of structured investing at Systima Capital Management.

Tax-exempt CMBS deals occurred on an occasional basis back in the 2000s, but the structure began to develop consistently in the late 2010s when Citigroup and Freddie Mac rolled out programs offering credit risk transfer securities backed by tax-exempt loans issued by state or local housing agencies. The tax-exempt structures of these deals offer lower costs of capital than standard taxable CMBS or traditional affordable housing loans backed by Fannie Mae or Freddie Mac. Freddie Mac then launched a multifamily loan program in 2017 securitized by tax-exempt loans tied to properties receiving new-issue 4 percent Low-Income Housing Tax Credits (LIHTCs) and expanded its outreach of the offering in late 2024 through a new registration system.

Now, the product is starting to take hold as a securitized offering in the municipal debt space at a time when there is increased support nationally to find financial solutions for America’s housing challenges. The deals have become more attractive to investors in a higher interest rate climate since the value of tax-exempt debt stays higher as rates remain elevated while also serving as an attractive option for high-yield investors who are drawn to collateral protections like the federally backed LIHTCs. A recent deal that Systima itself was involved in underscores the increased demand.

In July, the company closed a $153 million tax-exempt affordable housing bond deal through the Public Finance Authority, a conduit issuer based in Wisconsin, that was more than eight times oversubscribed with more than $1.2 billion in orders from 19 institutional investors. The transaction was securitized by a pool of loans on seven properties encompassing a 1,272-unit portfolio across Wisconsin, Illinois, Florida, Tennessee and Texas that participate in the LIHTC program, which provides tax incentives to affordable housing developers and investors.

Paszczykowski said Systima has sought to become one of the first dedicated managers to bring private-label, tax-exempt affordable housing securitizations into the mainstream as a capital markets strategy to a broader investor base. He noted that the firm, which acts as buyer of subordinate B-piece certificates, is trying to educate investors about the durability of affordable housing credit and why the first-loss position can offer compelling risk-adjusted returns.

“The market has definitely evolved as more participants have recognized the benefits of tax-exempt income and the strong historical credit performance of the affordable market,” 22 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

Paszczykowski said. “Now you’re having rated tranches backed by affordable housing bonds and loans, and you’re getting a much broader institutional investor base looking at the asset class, driving that demand and liquidity and allowing the securitization market to scale.”

While the exact financial benefits for investors can vary based on variables like bond yields, recent data shows a 50 to 60 basis point spread savings between tax-exempt and taxable affordable housing securitizations, according to Paszczykowski.

J.P. Morgan Chase was lead underwriter for the $153 million Systima deal, with Wells Fargo acting as co-manager. Systima retained the subordinate Class B certificates in the deal.

Jason Kahn, executive director in public finance trading at J.P. Morgan, said the emerging tax-exempt CMBS business is benefiting from conservative lender underwriting and a strong track record of property performance. He added that there’s “predictable deal flow” now by leading issuers with new entrants also coming aboard. Secondary market trading liquidity from brokerdealers has also increased.

Kahn stressed that historically low delinquency and foreclosure rates of LIHTC-financed affordable housing enabled and widely utilized under tax-exempt CMBS has boosted credit ratings of these deals to give investors added confidence. While LIHTCs are permissible with traditional CMBS transactions, they are rarely used due to strict compliance requirements involving special servicers.

“Low-Income Housing Tax Credit equity investors provide an external layer of institutionally held credit support that differentiates our growing tax-exempt sector from taxable CMBS,” Kahn said. “The rating agencies are a valuable participant in the industry and continue to invest their time and resources toward providing ratings that reflect credit characteristics in a format our fixed-income investors are used to reviewing as part of their due diligence process.”

Momentum for new affordable housing funding sources such as tax-exempt CMBS got an added boost this year when a newly enacted federal housing bill permanently lowered the taxexempt private activity bond financing threshold for 4 percent LIHTCs — a key incentive for buying or rehabbing affordable rental housing — down to 25 percent from 50 percent.

With fewer municipal bond allocations now required to get LIHTC credits, developers will need to find new funding sources to replicate those missing dollars, according to Lisa Washburn, managing director and chief credit officer at Municipal Market Analytics.

As more affordable housing tax-exempt CMBS deals price, the institutional acceptance of the securitization structure should grow, Washburn said. She stressed that rating agencies could play a major role in advancing these transactions since the deals now receive at best credit ratings in the low single-A investment grade range if they don’t have a financial guarantee.

“Affordable housing is not highly rated on a stand-alone basis. But, if you can create a significant portion of those as AA, that will really open up the interest in that type of security,” Washburn said. “There just needs to be more of them and more

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BY ANDREW COEN

investment in understanding them, and then I would expect the investor base would grow.”

S&P Global Ratings assigned an A-minus rating to the most senior bonds and a BBB-plus rating to the subordinate tranche in the $153 million Systima deal. All seven assets in the transaction participate in the LIHTC program and provide rental housing to tenants at or below 60 percent of the area median income.

Paszczykowski noted that private-label, tax-exempt affordable housing securitizations serve as a viable alternative for the traditional municipal bond market for affordable housing.

That’s because the securitizations can yield a lower cost of capital through an expanded investor pool aided by strong ratings boosted by credit enhancements like LIHTC. When Freddie Mac funded affordable housing deals in the past, prior to Systima’s founding, the government-sponsored enterprise was largely limited in executing third-party executions that would enable banks to free up their balance sheets from securitizing affordable housing bond deals, according to Paszczykowski.

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Since launching in 2013, Systima has been part of the overall growth of the tax-exempt CMBS affordable housing securitization space as one of the first non-bank entities to utilize the private-label, tax-exempt affordable housing securitization market.

Paszczykowski joined Systima from Hillenbrand Partners’ commercial real estate group when the firm formed. Prior to that, he led the ratings process for CMBS loans at Fitch Ratings.

“Our goal was to be an early mover in bringing a capital markets approach to affordable housing finance, with securitization as a core part of our strategy,” Paszczykowski said. “The market has evolved significantly, and having the ability to create a private securitization with an S&P rating allows us to recycle capital and finance additional affordable housing.”

Tax-exempt CMBS has emerged as another funding source for affordable housing at a time, too, when the municipal bond market at large has been playing an increasingly active role in the sector, according to Municipal Market Analytics’ Washburn. She has tracked borrowing trends from state and local governments

at the firm since 2011.

The amount of bonds issued annually by state and local housing agencies have risen steadily over the past eight years, going from $9.6 billion in 2017 to $22.9 billion in 2025, according to MMA data. Affordable housing bonds issued in the municipal bond market for 2026 totaled $17.3 billion as of Aug. 24.

Washburn noted that amid the increase of municipal debt for affordable housing projects, there has also been an increase in other financing mechanisms. That includes the tax-exempt CMBS market along with tender option bonds that are placed into a special purpose trust.

While the market for private-label, tax-exempt affordable housing bond securitizations has expanded at a slower pace than Systima initially envisioned more than a decade ago, Paszczykowski is bullish on near-term growth of the space as more big banks like Wells Fargo, J.P. Morgan Chase and Jefferies look to underwrite deals. He stressed that the large-scale need for more affordable housing around the county only amplifies the need for the tax-exempt CMBS market to play an increased role.

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“Coast to coast, affordable housing is a major issue, and a lot of states and cities are trying to solve how to deliver more affordable housing for people that live there, and a way to do that is to drive down costs to develop affordable housing,” Paszczykowski said. “Part of that is this tax-exempt securitization market bringing more capital in and driving down loan spreads to lend more proceeds.”

Going forward, balance sheet lenders are expected to use private-label, tax-exempt affordable housing securitizations more in some form, according to J.P. Morgan’s Kahn. He noted that as demand for tax-exempt CMBS grows, capital costs for the underlying loans financing affordable housing will decrease over time, helping to produce more apartments in the U.S. “We’ve experienced this dynamic in other securitization markets where growing competition has driven capital costs lower and has translated to lower borrowing costs at the property level,” Kahn said. “This dynamic could benefit affordable multifamily housing finance in the U.S., and the municipal bond market is ready for it.”

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ROAD Work New financing carrots — and regulatory sticks — abound in this summer’s big, bold 21st Century ROAD to Housing Act, but they’re not enough on their own to spur desperately needed development

BY BRIAN PASCUS

t’s often said that home is where the heart is. But, in America today, buying a home has become increasingly associated with stress, frustration and widespread economic anxiety as the country finds itself mired in a generational supply crisis.

J.P. Morgan Chase recently estimated that America faces a housing shortage of 2.8 million units, and that it could take around 10 years to resolve. Others, like the U.S. Chamber of Commerce, believe the shortfall is 4.7 million homes.

Meanwhile, a Harvard University study in June 2026 found that national home prices have increased 54 percent since 2020, and that the average single-family home sales price is nearly five times the median household income.

Clearly something needed to be done.

In late June, Congress passed the 21st Century ROAD to Housing Act with sweeping bipartisan majorities — 85-5 in the Senate, 358-32 in the House — belatedly addressing a longsimmering housing shortfall through a combination of more than 40 different economic incentives, regulatory reforms and updates to existing federal laws that aim to spur construction of new affordable housing, single-family homes and manufactured housing. (ROAD stands for Renewing Opportunity in the American Dream, if anyone doubted the intent of legislators.)

“Both political parties were hearing from their constituents

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that the issue of housing affordability was a very serious one, as high housing costs were impacting communities of all kinds throughout the country,” said Dennis Shea, executive vice president for housing at the Bipartisan Policy Center, a Washington, D.C., think tank. “But, when dealing with this issue there’s no silver bullet, no magic bullet — it requires the private sector.”

Rather than muscle through one flashy change or a single major reform, the bill can best be described as a hodgepodge of carrots and sticks to localities and private sector players to hopefully support greater housing production via construction and investment, while also updating several once-onerous federal legal codes to eliminate red tape that has stymied the sector for decades.

“This legislation does a lot of little things that individually don’t seem like a big deal, but collectively can make a real impact of increasing housing supply and reducing costs over time,” said David Garcia, deputy director of policy at the Terner Center for Housing Innovation at the University of California, Berkeley.

Others, however, have pointed out that the new law appropriates no new money for housing development and that its reforms infringe on local housing policies and private sector investment strategies. President Donald Trump famously refused to sign the bill (it became law anyway on July 11 without his signature) and even characterized it as “a big yawn.”

“The unfortunate reality is, as it was bipartisan, that it’s so weak and a terrible piece of legislation,” said Toby Cobb, managing partner and co-founder of 3650 Capital.

“There are many different things in there, but it actually does very little. It does nothing other than make people spend money on lawyers.”

Even so, then-White House press secretary Karoline Leavitt described the bill in a statement as “one of the most significant pieces of housing affordability legislation in American history.” It certainly is the most notable bipartisan housing law since Congress passed the Low-Income Housing Tax Credit program in 1986 and the Housing and Economic Recovery Act of 2008.

Jeffrey Lubell, senior fellow at the Urban Land Institute’s Terwilliger Center for Housing, said that Americans shouldn’t expect the federal government to solve the housing supply problem in one fell swoop, though this new law does contain “many modest but useful provisions” that will eventually make a material difference in support of an expanded supply of more housing.

“It’s not a home run, it’s not a single, they’re doing what they can,” Lubell said. “But now the devil will be in the details with how to implement this.”

Investor walkback Even before the legislation became law, critical aspects of American single-family housing got mired in a messy bill-drafting process that could have had far-reaching consequences for commercial real estate investors.

While the new housing law has its origins in a bipartisan housing bill introduced in August 2025 by Sens.

Elizabeth Warren, a Massachusetts Democrat, and Tim Scott, a South Carolina Republican, things kicked into high gear in early January only after Trump called on Congress to ban large institutional investors like BlackRock and Blackstone from buying single-family homes and turning them into rentals, adding in a social media post that “people live in homes, not corporations.”

As elected officials in both chambers negotiated across the aisle on the fine points, it became clear that the build-to-rent (BTR) industry — a subclass of single-family homes often constructed identically in planned communities, or as townhouses in

subdivisions, and brought to the market as rentals — would be adversely affected.

Making up as much as 4 percent of the housing market, BTR is mainly owned and developed by institutional investors, thus making the initial provision passed by the Senate — which required institutional investors to sell BTR single-family homes to individual buyers after seven years — a nonstarter.

Eventually, the House bill removed the stipulation, exempting BTR entirely, and the final bill limits investors who already own 350 single-family homes from increasing single-family housing stock, thus allowing existing firms to hold on to much of their portfolios, but stopping a proliferation of new single-family rental portfolios to grow on Wall Street at Main Street’s expense.

“In general, the market has been frozen since early January because of the uncertainty around the singlefamily [piece] and the different variations of the bill that affected the BTR space,” said Daniel Sindelar, assistant vice president for investment research at Heitman, an institutional investor in both sectors.

Tomasz Piskorski, professor of real estate studies at Columbia Business School, called institutional investors “a convenient scapegoat” for Congress and emphasized that Wall Street owns only a tiny fraction of homes in the U.S., roughly 3 percent to 5 percent of national housing stock.

“I can’t believe how misunderstood this is,” said Piskorski, who admitted some cities like Jacksonville, Fla., and Atlanta have a disproportionate share of homes owned by investment firms.

“They own the homes because they acquired them during the Great Recession, when homes were foreclosed on,” he added. “They entered when so much of U.S. housing stock was in foreclosure, but, on the margin, they haven’t been increasing house prices.”

A 2022 study from the Government Accountability Office found that the estimated share of the singlefamily rental market owned by institutional investors is as high as 14 percent in Phoenix; 18 percent in Charlotte, N.C.; 21 percent in Jacksonville; and 25 percent in Atlanta.

Regardless, investors like 3650’s Cobb believe that the new single-family rental restrictions will create more harm than good by preventing the private sector from doing its part to build and invest in the housing supply.

“All it will do is just slow down deployment of capital into the very thing you want to accomplish,” said Cobb.

“And how can you tell people you can’t invest in something? It’s probably unconstitutional.”

Sen. Scott’s office defended the legislation in a statement to Commercial Observer.

“Today, the American Dream is a little more within reach for families across this country,” said Scott. “The 21st Century ROAD to Housing Act will help more Americans plant roots, build stability, and pass opportunity to the next generation.”

Rental restrictions aside, there’s a lot that the bill does do — effectively or not.

New measures Spread over numerous provisions, the ROAD to Housing Act can be summed up in four broad themes: modernizing federal housing programs, incentivizing pro-housing policies at state and local levels, expanding affordable housing options, and streamlining regulations.

The new law expands the Rental Assistance Demonstration (RAD) program by raising the cap on conversions to codify improvements for up to 555,000 public housing units, and creates a Department of Housing and Urban Development (HUD) pilot program to finance

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existing home repairs. However, the biggest on-thebooks change involves manufactured housing.

Manufactured housing (which is another term for mobile homes) are smaller dwellings built entirely inside factories and then moved via a steel frame to a land site, where residents typically own the individual units but companies own the land the homes sit on. The new housing law updates a HUD code requiring manufactured homes to sit on a permanent chassis (under the assumption they would move at some point, even though they rarely do) — a modification that experts believe could reduce the costs of each manufactured home by $5,000 to $10,000 and allow for greater design and innovation during production.

Andra Ghent, professor of urban finance at the University of Utah, called the removal of the permanent chassis “the most promising part” of the housing law, while the Urban Land Institute’s Lubell called it “the single most important provision in the law” that will facilitate new housing supply.

Updating the permanent chassis requirement “will enable the construction of multiple-story buildings within manufactured housing,” Lubell said. “And, because manufactured housing is governed by a single national building code, it enables economies of scale that we don’t see with other housing types.”

Charles Young, CEO of Sun Communities, a manufactured home supplier with approximately 300,000 residents under its portfolio, estimated that 22 million Americans live in manufactured housing.

“If we as a country are really serious about housing affordability in America, we need to make it easier to produce more housing at lower costs,” Young said. “[The new law] removes some of the outdated barriers that have limited innovation within manufactured housing.”

The ROAD Act also includes modifications to the HOME Investment Partnerships Program, the largest federal block grant currently on the books and one aimed at financing affordable housing. The new law permanently reauthorizes the program since it expired in 1994, giving state and local governments new access to HOME Funds to support low-income and affordable housing measures.

“The HOME program is a really important federal funding program that can do a lot of different things,” said Liz Osborn, vice president of policy for Enterprise, a housing advocacy group. “And it’s the flexibility that makes it so important: It can be used for housing development, down payment assistance and rental assistance.”

If the new law updates several federal housing rules, particularly in the low-income space, then it also aims to improve the ability of the private sector to finance more affordable housing loans and developments itself.

The bill expands and raises the cap on what commercial banks can invest from their capital pool into affordable housing projects from 15 percent to 20 percent, in an attempt to increase bank and investor demand for the particular debt found in the Low-Income Housing Tax Credits (LIHTCs).

While larger commercial banks usually don’t reach that cap, smaller regional banks are often worried about overstepping that capital limit, a restriction that often artificially stymies investment into LIHTC and public welfare investments by medium-size credit providers.

“It’s important and will unlock a lot of capital because there were a fair number of banks that were running up against that limit,” said Dudley Benoit, senior managing director and head of LIHTC investor relations at commercial real estate finance firm Walker & Dunlop. “The legislation is letting institutions go to 20 percent, and that will help groups do more. It’s a big win and something the industry was pushing for some time.”

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Moreover, the law also seeks to expand the availability of small mortgages — as 22 percent of owner-occupied homes in the U.S. are valued below $200,000 — by creating a four-year pilot program through HUD that incentivizes lenders to offer mortgages under $100,000.

And, even without any new federal money attached, the network of incentives offered to state, local and private sector players makes up the largest chunk of the new law.

The biggest incentive is the Build NOW Act, which ties $3.3 billion of Community Development Block Grant (CDBG) funding to housing construction in different states and localities. It gives bonuses for those cities that build more homes, reduces funding for those that lag behind, and opens up previously hindered affordable housing production by allowing up to 20 percent of grant money to finally finance that sector.

“CDBG traditionally has not allowed dollars to go to new housing construction, but there’s a provision in the ROAD Act to allow CDBG dollars to support new development,” explained Garcia. “That’s a big change, particularly where affordable housing development costs are often very high, so it could be useful to cities looking to get more affordable housing projects off the ground.”

The Build NOW Act within the larger bill will also require communities to create a public database on undeveloped land and report each year on any zoning policies that are restricting new development. It also authorizes HUD to streamline a national environmental review and offer bonus grant funding to communities that build more housing each year.

“This is significant because I don’t know if the federal government has ever conditioned federal dollars to housing production,” said Garcia. “It’s a pretty big recognition that cities will only support housing growth if they have real dollars attached to their outcomes.”

The law’s other new sweeteners include a novel competitive grant under HUD that incentivizes cities and states to streamline their regulatory process for homebuilding and development; an incentive for localities to prioritize pre-reviewed housing designs for new housing starts; a pilot grant program to fund the conversion of vacant commercial or industrial properties into affordable housing, particularly in economically distressed areas similar to Opportunity Zones; and a $200 million “innovation fund” for local governments that demonstrate reformed zoning codes and increased housing supply.

“The grant programs are tying money to measurable supply outcomes,” said Jeanna Kenney, economic professor at Villanova University’s School of Business. “It’s saying, ‘Let’s look at how much you increased supply in the last year, and that’ll determine how much additional money you’ll get from us.’ ” Other housing experts are far more doubtful, if not openly cynical, that these incentives will make any material difference.

“I really don’t see the incentives to cities and states moving the needle — it’s too small,” said the University of Utah’s Ghent.

“I cannot see a local planning commission operating any differently just because they get a few more transportation dollars.”

Brad Dillman, chief economist at multifamily investor and developer RPM Living, was neither impressed by the incentive package nor overly concerned about the low housing supply metric, which he believes was impacted by recent immigration waves rather than a lack of building. He emphasized that since the Federal Reserve artificially compressed the 10-Year Treasury yield during the 2010s with its quantitative easing policies, mortgage rates and the prices of homes have been artificially affected for the worse — a policy that Congress and the executive branch have little control over, for now.

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‘The law’s biggest shortcoming is it didn’t address the local zoning regulations.’

BIPARTISAN BANTER: Republican Sen. Tim Scott of South Carolina and Democratic Sen. Elizabeth Warren of Massachusetts helped steer the ROAD to Housing Act through the Senate. It passed both houses of Congress overwhelmingly in late June. catch up to them,” said Dillman. “You’re getting these gigantic interventions in the normal function of the economy to distort long-term assets like real estate.”

More help needed Despite the numerous acts and provisions attached to the new law, many housing experts believe the ROAD Act will ultimately fail to make a meaningful difference in the housing crisis. The prime reason is the federal legislation’s inability to change zoning laws, regulations and land-use restrictions, which have traditionally been delegated to state and local governments.

“The law’s biggest shortcoming is it didn’t address the local zoning regulations,” said Piskorski. “It’s a difficult balancing act. Local communities want control on what is built there, but there’s this NIMBY approach to these things.”

Some states and cities — notably California, Montana, Florida, New York City and Austin, Texas — have recently updated and reformed various zoning codes and ordinances to eliminate obtrusive regulations on new housing development. Yet, far too many localities still abhor any new development, particularly of multifamily homes and single-family rentals.

“Having sat on my local planning commission in Salt Lake City, nothing has illustrated the barrier to increasing housing supply quite so vividly,” said Ghent. “The city’s resistance to having increased housing is just insane and comes in all these different forms.”

3650 Capital’s Cobb recalled having experienced a three-anda-half year delay to secure zoning approvals and a lease extension to build a 400-unit multifamily complex above a train station in Miami, a regulatory environment which he called “super difficult” even though 20 percent of the units he developed were reserved for affordable housing.

“Why should it take three and a half years to do anything?” he said. “The reality is every time you start trying to build in places that make sense you get pushback from a community. Density is what scares a crowd.”

When asked about an ideal federal housing law, or at least one that exceeds the aims of the ROAD Act, multiple housing experts called for Congress to establish a single national building code, one that could encourage standardization of construction processes and homebuilding at scale to dramatically lower costs for builders and buyers alike.

“We need to have a national building code, a standard building code with some regional variation, but only for wind load, snow load, wind speed and flood risk,” said Lubell. “Every state and locality adopts its own rules [right now], and, if you have a code that varies from one place to another, it’s very hard to achieve economies of scale, especially with outside construction.”

Shea of Washington’s Bipartisan Policy Center estimated that 25 percent of the costs of single-family home construction, and 40 percent of multifamily home construction costs, are due to regulations.

“The permitting process can be exceedingly long, and, when you have long permitting processes, it just adds costs to housing,” Shea said. “There’s a multiplicity of regulations that impacts that cost — it’s not just one, two or three — so I’d figure out the whole package of regulations and decide what is necessary and not necessary.”

Housing experts like Berkely’s Garcia said it will take some time until we see increased supply and lower costs, as homebuilding often takes months. As a result, many of the provisions and guidelines adopted by the new law will require years, if not multiple administrations, before they impact the market.

More than anything, considering the power of local zoning laws, the ball for the future of American housing now sits outside Washington’s hands, and in the court of states and localities.

“The jury is out. It will come down to how state and local governments react,” said Villanova’s Kenney. “There is such low-hanging fruit in the supply process, and there’s so many small changes that local governments can make to make development easier.”

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FEAT URE

The technology around retail site selection is advancing rapidly — but holes persist and traditional tactics are still necessary

BY LARRY GETLEN

n the late 1960s, science fiction writer Arthur C. Clarke posited a now-famous law of the universe: “Any sufficiently advanced technology is indistinguishable from magic.”

As the rapid advancement of technology, especially given the ongoing progress of artificial intelligence, often makes this seem truer by the day, its implications in commercial real estate are often of a type that would have seemed like pure voodoo to CRE professionals when Clarke put forth this statement.

Here’s one example: A restaurant chain with over 3,500 locations in the U.S. is researching potential sites for additional stores in a certain part of Los Angeles. The chain has very specific parameters in mind, including a cash-oncash return of at least 20 percent, at least $1.5 million in annual revenue, and a maximum cannibalization factor of the company’s other area stores of 10 percent.

Punch this information into a computer program, press a button, and moments later the computer produces a detailed map of the neighborhood with a series of misshapen blobs representing the exact areas — down to specific streets and even addresses — where a new store would produce these results or better.

In an ever-evolving boon for retailers, location intelligence has ascended to a level where platforms can predict retail success, including revenue and investment return figures, down to a specific site. These predictions are based on hundreds of

demographic and psychographic factors as well as information such as competitive intelligence, complementary local businesses, local crime patterns, and the retailer in question’s own history.

As one example, consultancy Bain & Company markets a location intelligence program called Vantage that evaluates current and prospective physical sites for retailers, driven by global data sets and machine learning analytics that translate its findings into a user-friendly location visualization dashboard.

Bain, in a demonstration of the platform for Commercial Observer, produced the hypothetical example cited above, which also offered further predictive detail for the areas represented by the misshapen blobs on the map.

Clicking on one such blob showed that potential new stores for the franchise in that area could be expected to produce annual revenue of between $1.8 million and $1.9 million and cash-on-cash returns of 25 percent, with the highest potential cannibalization of a previously existing franchise location of just 2.3 percent. It also noted, for a franchise with high levels of local saturation, exactly which stores will face cannibalization, and by what percentage.

The program works the other way as well, allowing retailers and brokers to drop a pin on any nearby location to adjust predictions accordingly based on information already provided. Predictions also can be based on additional details that can be as granular as whether there’s a traffic light nearby or on which side

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of the road the site would be located, all of which can impact foot traffic and sales.

“This is where it becomes really powerful,” said Francois Vayleux, vice president of global retail practice at Bain, “because you potentially have tens or hundreds of areas that could have high potential for a site, but this allows you to select an area and really assess how much money you can make based on the information available.”

Given the vast amount of location intelligence data and analytical tools available, including significant advances in these categories in just the past few years, being able to analyze locations down to the finest detail is quickly becoming both a valuable tool and an essential ability for any retailer or retail broker.

CBRE Executive Vice President Cassie Durand, who specializes in tenant representation for retail clients, recalled that, as the industry was attempting to carry on in the wake of the COVID-19 pandemic, any recently compiled data became quickly irrelevant.

The manner in which people worked, shopped and lived had changed faster than it previously had at any point in our lifetimes.

Durand noted that, as she sought to determine the best way forward for her retail clients, her first new hire — which she characterized as an out-of-the-box hire at the time — was not a broker but a location intelligence specialist.

“I hired someone who could leverage data to help me answer questions about how the market was

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‘You really do need to marry the art with the science.’

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“When retailers are evaluating new sites, there are a variety of ways our data could help them navigate that process,” said Elizabeth Lafontaine, director of research at Placer.ai. “One is really looking at the trade area of a new market as well as the trade area of their individual stores so we can help them home in on exactly where their visitors are coming from, because sometimes retailers have sort of a general idea — ‘This is my audience, this is how far they’re driving, this is where they’re coming from and these are the ZIP codes they live in.’ But we can help them home in on exactly who their core customer is, then they can apply that logic and reasoning to any potential new sites.”

The catch While all this data, as well as the ability to deeply process it all, is important for retailers today, it hasn’t completely replaced the need for human experience, particularly the kind you get from having walked local streets to familiarize yourself with an area, and a history of working with a wide variety of retail clients.

Ben Weiner is an executive vice president at Ripco Real Estate who works with retailers such as Target, Best Buy, Chipotle, Bob’s Discount Furniture and Shake Shack.

When it comes to location intelligence, Weiner describes the pooling of data as a combined effort that includes each clients’ own proprietary location intelligence data and programs, foot traffic data from Placer.ai, and Ripco’s own information based on its vast experience working in New York City retail.

“While retailers are using their own programming to guide decision-making, we can then come in and say, ‘On this street, here are the sales that X, Y and Z tenants are doing. Here’s where they rank among their stores in the outer boroughs. Here is the subway ridership for the subway stop on their corner and how that has grown or declined over the last five years,’ ” said Weiner.

For all the ways technology has advanced in the area of data site selection, Weiner portrays this as the advantage for a retailer of having a broker who has engaged in old-fashioned shoe leather information gathering.

Weiner notes that while data points like ridership and vehicular data are public, the “gold” a good local broker provides for a retailer is often in their information about local sales and leasing.

“That information is the most important thing we have as brokers,” said Weiner. “When we’re gathering sales data, like what a restaurant is doing in a market or what they paid to be in a certain space, that’s us out there getting that information through relationships, and that’s extremely valuable.”

Durand noted that there could be many reasons why trusting data alone could risk missing crucial information.

“Data is wonderful for gut checking, helping you make sure you’re not missing anything and validating decision-making, but it should never stand alone,” said Durand. “It should be married with the art of what we offer, which is our local market knowledge and deep understanding of historical performance, including who’s coming, who’s going and why.”

One key metric data providers don’t measure, according to CBRE’s Durand and Placer.ai’s Lafontaine, is traffic around international tourism, the collection of which is restricted due to privacy laws in other countries.

“There is a world in which we would have much better data around tourism. That would be my No. 1 wish,” said Durand. “That’s the biggest hole, because tourism is such an incredible driver, especially in urban markets where retailers are making much bigger decisions because there are larger rents. There’s more risk in making those decisions, [which are often being made] because of the perception that tourism is there.”

Durand also noted that demos can be misleading in areas that may not follow predictable patterns or trends.

“If you look at demos of South Florida, you wouldn’t think of

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evolving day to day, because I knew that my clients needed a sense of confidence for themselves, their boards and their stakeholders to be able to make not even big decisions, but just the next decision — what do we do in the next six months, let alone the next three years,” Durand said.

Client confidence in company data, especially at a time when confusion swirled about the nature of even the most basic human behavioral patterns and interactions, was paramount both for servicing clients and as a competitive advantage, Durand said.

“What started as a brokerage business has evolved into a consulting business, and that is absolutely the goal,” said Durand, echoing a similar repositioning for brokers throughout the industry. “We want the client to feel like they’re dealing with a consultant who really cares about the data that is driving decision-making.”

This clarity and certainty regarding data and how to best analyze it is essential today, especially given the oversaturation of available data.

“In the past, it used to be digitally native brands that had all this data about their consumer at their fingertips,” said Alanna Loeffler, a senior managing director at Cushman & Wakefield, who works with digitally native brands branching into physical locations as well as traditional retailers. “Now, all brands have all sorts of data, and they have so much more on the consumer than they ever had before. I think that’s something that’s really shifted in the last few years.”

Sebastien Pavy, a partner in Bain’s Los Angeles office, also noted how deeply the data environment has changed of late.

“The big difference between 10 years ago and today is how we moved from ‘You should look for a site in this kind of very large, undefined trade area with a large radius,’ to ‘This is the corner, or the three great locations [you should look at],’ and much more specific and targeted information from types of store formats to specific store locations,” said Pavy.

Loeffler noted that the growing range of options for how consumers can spend their time and money, paired with tough economic times, has made possession of this knowledge essential for retailers.

“Given the macroeconomic environment, consumers are being so much more selective than ever before about where and how they shop,” said Loeffler. “It’s become leaps and bounds more important for brands to understand everything about that consumer — not just the demographics or household income, but who they are, where they live, where they work, and what other brands they shop for.”

While nearby competitors are an essential data point in site selection, this last point makes complementary retailers just as important in helping select locations that offer cross-shopping opportunities more likely to attract consumers.

Vayleux mentions the integration of detailed factors about other nearby retailers, both competitive and complementary, as significant data points in a Vantage analysis.

“At the end of the day, we want to use Vantage to identify the market around a specific store, identifying the dynamics in terms of competition and the demographics around a specific store that could explain its performance,” said Vayleux.

On the competitive front, Vayleux demonstrated how Vantage can select any store or potential location and overlay a slew of competitive information onto the site, including local malls, department stores, grocery stores and other restaurants.

“Here, for instance, I have a Subway, a Taco Bell, a McDonald’s and a Wendy’s,” said Vayleux, pinpointing a location on the visualization map and layering on other demographic characteristics such as population density. “That’s really important as we think about identifying the competitive intensity of a given area.”

One much-relied-on source of data and analytics is Placer.ai, which provides foot traffic information and interpretive analytics to clients throughout the CRE industry to reach conclusions about ideal sites.

the Greater Miami area as dense or as affluent as it is, because you have a lot of transient snowbird-type behavior in that market,” said Durand. “So you really do need to marry the art with the science.”

Peter Braus, president of commercial real estate services firm Lee & Associates, cited this sort of detailed local information as the one area where technology is often still lacking, especially in a sprawling market like New York City. He also noted that such details are often some of the most useful information in selecting a site.

“The one thing everyone asks for, the holy grail that we haven’t been able to get in a meaningful way, is the ability to track individual store sales,” said Braus. “That’s something every tenant wants, [but that you can’t obtain] unless you’re dealing in a mall setting where tenants have to report sales to their landlords. Here in New York City, that almost never happens, so you’re at the mercy of guesstimating what a store is going to do.”

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Braus also noted other limitations in using technology to evaluate retail possibilities throughout New York City.

“In markets outside of Manhattan, where I do a lot of business, technology tends to come in half-mile, mile or two-mile swaths,” said Braus. “But that’s not really applicable here, because a half-mile in New York City puts you in a totally different neighborhood, and oftentimes things look very different one block away.”

Braus said that he fills data gaps with information from Placer.ai and other sources that help isolate shopping patterns.

But Weiner noted that even the universally utilized Placer.ai data does have one weakness in urban environments in that it can’t distinguish between different floors for high-rise buildings.

“When you’re in an urban environment and there’s 50 floors to a building, but you’re looking at just the ground-floor space, you have to keep in mind the data you’re seeing from Placer might be for the

entire building or something on an upper floor, not just the ground floor,” said Weiner, who added that this reinforces the importance of on-the-ground knowledge. “Where we add value is that we know the markets on a granular level.”

(In response, a spokesperson for Placer.ai noted that in dense urban situations, “the platform provides additional context and notes that certain properties in ‘dense areas, multistory buildings, or similar settings’ are handled differently from standard venues.

For those properties, we offer a separate report type that measures activity within a radius of the property instead.”)

All of this reinforces the idea that, for all the incredible advances in data and technology, sometimes the most important tools are more traditional.

Durand, stating that the plethora of data can sometimes raise more questions than it answers, believes that adding a retailer’s

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own long-gathered information on their customers to the rest of the available data is the optimal blend for finding the perfect site.

“The special sauce is when your client has data you can leverage,” said Durand. “It makes the output clearer in that you’re layering in existing customer behavior with the broader market, and there’s a lot of power in that. For companies that are direct to consumer, you could have one that’s 20 years old that’s never opened a store, so they have a ton of information [about their customers] but don’t have information about how their customer interacts with retail.

“That’s where the data can be that much more impactful, because you don’t have the comp set around store performance to look at alongside your e-commerce performance. That’s where we get super deep into the weeds with our clients to help them build out their thinking around how their customer is ultimately going to behave in the market.”

COMMERCIALOBSERVER.COM | SEPTEMBER 1, 2026 | 29

PHOTO ILLUSTRATION: COMMERCIAL OBSERVER

FEAT U R E

Following the Data Center Money Some $128 billion in data center debt matures by 2028 — more than the entire U.S. office CMBS maturity wall — and other revealing facts from Atrium’s new analytics tool for the asset class du jour

BY BRIAN PASCUS he data center marketplace keeps growing, and one analytics firm has tracked where all $1.3 trillion of identifiable debt powering this development boom of nearly 4,300 domestic data centers has come from — and where it is going.

30 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

Atrium, a San Diego-based AI analytics startup founded in 2024, late last month launched its interactive data and research platform, known as Who Finances America’s Data Centers, to track the debt dollars behind every data center deal in the U.S. The platform is a first-of-its-kind resource that uses data

collated from local property records, Securities and Exchange Commission credit agreements, commercial mortgage-backed securities (CMBS) securitizations, as well as commercial bank and private credit loan syndications and corporate debt issuances. It uses that data to follow the money behind 3,038 operational data center deals — and another 1,258 that are in different stages of their life cycles.

Ryan Alfred, founder at Atrium Data, told Commercial Observer that data centers “are the biggest driver in the economy right now.” Yet, because they’re financed differently than traditional real estate classes — and often require layers of countylevel loans, syndicated debt, CMBS, asset-backed securities, special purpose vehicle (SPV) structures, and, most unusually, credit issued by regional utility companies — it has been difficult for market players to get a clear picture on the debt behind the boom.

“As a result, no one had this 360-degree view of who is financing them and what their credit structures are,” he said. “We went out and used all our data, and all our resources, to build the 360-degree vehicle of data center financings.”

The firm’s website notes that the tool and report are “the first in an ongoing series that will track every identifiable data center investment dollar in the United States” and that it will be updated periodically as deals close, including securitizations and county-level recordings.

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Alfred emphasized that Atrium came at this with “fresh eyes,” in that its analysts weren’t constrained by how data had been previously collated and presented in the CRE analytics space.

“What really informed our development was our clients telling us that the data they needed was scattered across different silos — securitized loans in one place, county filings in another — and that bringing it all together in one platform would create a lot of value for them,” he said.

Moreover, Atrium is developing an inclusive CRE analytics tool that tracks industry-wide credit and debt deals, ranging from commercial banks to real estate investment trusts (REITs) to insurers to private credit firms, and includes data from country records, private syndications and loan sales. It will be assetclass agnostic.

“We’ve been working on this broader real estate credit platform that goes beyond data centers,” he said. “We believe we’ve built a general purpose real estate credit tool that does something no one else does.”

The Atrium data center tool analyzed the source of $1.3 trillion of CRE debt behind data center deals, taking into account and isolating $93.1 billion of financial overlap. The result found that property mortgages, syndicated facilities, private credit, hyperscale corporate debt, and debt from regional utility firms have contributed the vast majority — $1.1 trillion — of U.S. data center development debt.

Property mortgages contributed $148 billion to U.S. data center development, with Wells Fargo topping the list at $8.2 billion in financings, followed by J.P. Morgan Chase with $6.9 billion.

But those mortgages tell only part of the story. Atrium argues that the largest lenders in CRE operate simultaneously across property mortgages, syndicated loan participations and private credit warehouse lines, meaning it’s incumbent to analyze their combined debt holdings as one metric.

Atrium uses TD Bank to bring this point home, noting that the Canadian-based bank has issued $14.8 billion in direct loans against data center developments, but that number increases to $27 billion when the bank’s 79 syndications are taken into account, making TD Bank the biggest data center lender in the world. Wells Fargo and J.P. Morgan Chase are third and fourth, at $18.7 billion and $17.9 billion, respectively.

These syndicated facilities — in which data center operators secure debt from numerous private equity sponsors and commercial banks — account for $224 billion in industry credit.

The biggest individual deals in the syndicated debt space include Coreweave’s $23 billion debt facility from 38 lenders; DigitalBridge and IFM’s $20 billion debt facility from 24 lenders; QTS Realty and Blackstone’s $18.5 billion debt facility from 24 lenders; and Equinix’s $16.2 billion debt facility from 31 lenders, the largest deal sponsored by a public REIT. Then there’s the private credit part of the equation.

Atrium pointed out that asset manager PIMCO stands in a class by itself, with $23 billion of pure data center originations, of which $18 billion came from its Meta and Blue Owl Beignet bond issuance of October 2025. In the private credit space, Blue Owl Capital and Blackstone Credit follow PIMCO with $11 billion and $8 billion of data center originations, respectively.

All told, SPV and private credit account for $158 billion in U.S. data center development debt.

“Private credit’s arrival is real,” the firm wrote. “Three of the top 15 are non-bank lenders (PIMCO, Blue Owl, Blackstone Credit). Two years ago, none would have appeared on this list.”

Corporate debt from the big five hyperscalers — Amazon, Microsoft, Google, Meta and Oracle — accounts for $223 billion in long-term debt and credit facilities across the data center space, according to Atrium.

Amazon (and Amazon Web Services) tops the list with $67.2

COURTESY OF ATRIUM

‘If AI demand disappoints or power constraints delay delivery, refinancing risk could cascade across the capital stack.’

DATA DUDE: Atrium founder Ryan Alfred noted how differently data centers are financed than other real estate asset classes. billion, including $32 billion in data centers capital expenditures in 2025. Jeff Bezos’s Amazon team was followed by Microsoft’s $53.8 billion in debt, including $44 billion in capital expenditures in 2025.

But the largest amount of credit in the data center space comes from regional utility operators such as Dominion Energy, Consolidated Edison and PG&E raising and issuing hundreds of billions of dollars in debt — $428 billion in syndicated credit facilities from 27 utility firms — with the top 10 utility firms accounting for 68 percent of that total.

No utility player has issued more debt than San Francisco Bay Area-based firm PG&E, whose $64.6 billion dwarfs the nextlargest utility players: Atlanta-area Southern Company, which has issued $27.7 billion of debt, and Dominion Energy of Northern Virginia, which has issued $26 billion in debt.

Alfred explained that lenders typically aren’t comfortable financing data center deals that rely on site-based power, which drives the need for utility relationships. To this end, a utility provider like Dominion Energy has a pipeline of committed deals, but lacks the power generation capacity to meet energy demands three to five years out — so they must acquire capital.

“So what happens is they have existing debt, just like hyperscalers, and they take on massive new amounts of debt to finance the production of the power to meet the needs of data centers,” said Alfred. “This is a level or two above strict data center debt, but it’s all related.”

In the end, though, no matter where it comes from, this debt does need to either be paid down or refinanced, which brings the next element to Atrium’s research: Where the gold rush can go wrong.

Atrium found that $128 billion in data center debt matures between 2025 and 2028 — which exceeds the entire U.S. office CMBS maturity wall in that same timeline — while the already imposing number jumps to $213 billion when the three-year total incorporates 2028 and 2029, as well.

Atrium emphasized that “each dollar must either refinance at today’s rates, find a buyer or face restructuring,” and that — when considering that many of these earlier loans will refinance into a structurally higher interest rate environment — “the rate gap is punishing.”

The platform showed that a vast majority of existing data center development debt originated during the low interest rate years of 2020 through 2023, when the secured overnight financing rate (SOFR) sat between 0.05 percent and 4.5 percent. Today,

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those same refinancing rates are higher than 6 percent, with borrowers holding leverage refinancing into 8 percent deals.

“If AI demand disappoints or power constraints delay delivery, refinancing risk could cascade across the capital stack,” wrote Atrium. “For facilities with any vacancy, repositioning costs or capital expenditure needs, the margin for error vanishes.”

The research firm also highlighted how the sector faces risks from both hyperscale financing and development pullbacks, as well as present and future power grid constraints.

Atrium noted that the big five hyperscalers have accounted for $600 billion in capital expenditures in 2026 — up 36 percent from the previous year — and that if just one hyperscaler cut its expenditures by 20 percent, “the ripple effects propagate through the entire supply chain.”

“Construction firms, equipment manufacturers and, most critically, data center developers who have committed to buildto-suit projects on the expectation of hyperscaler lease-up, all face a demand shortfall,” Atrium wrote. “The risk is compounded by the herd behavior of hyperscaler spending. These companies are investing, in part, because their competitors are investing.”

And then there is the power conundrum. Atrium found that while development capital, open land and building materials are all readily available to power the data center development boom, electricity remains in short supply both now and in future.

For instance, PJM Interconnection, which generates power across 13 U.S. states and Washington, D.C., forecasts 30 gigawatts of incremental data center demand by 2030, equivalent to 30 nuclear reactors, according to Atrium.

“By June 2027, the grid could fall below established reliability standards, meaning that during extreme weather events or generation outages, controlled blackouts become a real possibility,” wrote Atirum, which noted that these grid investments to avoid that reality will raise consumer electricity prices in those states by $100 billion within seven years.

“This is not a hypothetical — it is a cost being socialized across the 65 million people served by PJM’s grid,” wrote Atrium.

“The political sustainability of this cost transfer is, at best, uncertain.”

This political backlash is now becoming apparent in Northern Virginia, home to more data centers than anywhere else in America. While Virginia itself is home to 668 data centers (56 percent more than second-place Texas), Northern Virginia’s Loudoun County — home to 70 percent of the planet’s internet traffic — hosts 306 facilities, which is more than in 45 individual states.

Despite the data center building and financing boom, it appears the political consequences stemming from negative public opinion are finally catching up with America’s “Data Center Alley” in Loudoun County.

Atrium wrote that Virginia lawmakers have now proposed legislation that will halt data center construction in the state.

Meanwhile, companies like QTS and Blackstone have abandoned developments, like the $4.6 billion Virginia Digital Gateway campus the firm planned, because of community opposition.

Atrium data showed that 48 national developments, representing $158 billion in development capital, were canceled in 2025, a number that has since grown to 75 projects, representing $130 billion, that have been blocked or delayed in the first three months of 2026.

“The number of organized opposition groups exploded from 396 at the end of 2025 to 833 across 49 states by the end of first quarter 2026,” wrote Atrium. “The data center industry faces an opposition movement that has crossed from nuisance to existential.”

COMMERCIALOBSERVER.COM | SEPTEMBER 1, 2026 | 31

Democratic Socialists and their allies will storm the New York capital next year with hopes of enacting progressive policies on retail rents, corporate taxes, housing and data centers

BY AARON SHORT

32 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

lbany could be ripe for revolution next year when a slew of socialists prepare to occupy the State Capitol for longer than a typical sit-in.

Two months ago, as Mayor Zohran Mamdani-backed candidates Claire Valdez and Darializa Avila Chevalier triumphed in their congressional primaries, a dozen lesserknown candidates endorsed by the Democratic Socialists of America (DSA) also won a clear path to seats in the New York State Legislature. Those DSA-endorsed candidates knocked out moderate primary opponents in reliably left-leaning districts with pledges to raise taxes on wealthy individuals, restrict aid to Israel, make housing more affordable, and build more public renewable energy.

“Our volunteer army elected the biggest socialist slate in New York history, and we’re going to bring that power to Albany to fight for the agenda they ran on,” Grace Mausser, NYC-DSA co-chair, said in a statement to Commercial Observer. “We don’t run candidates just to have friends in high places. We run candidates to put working people back in charge of our city and our state. The Democratic establishment should expect to hear a lot from us.”

The electoral victories were the culmination of a years-long effort by NYC-DSA organizers to recruit candidates and win races at all levels of government to move the state’s more moderate Democraticcontrolled chambers further left on fiscal and policy priorities.

In recent years, socialist state legislators have helped expand rental protections for tenants, including enacting tougher rules on evictions and on turning over apartments in general, and pushed to establish a landmark climate law that requires the state to reduce greenhouse gas emissions by 2050.

Now, DSA-aligned incumbents hope a surge of new colleagues will support a legislative agenda less wedded to industry interests.

“I think we’ll tax the rich. That’s not new, but that’s a continuation of the work we’ve been doing,” state Sen. Kristen Gonzalez of Queens told CO. “We’re really clear in what we believe in. We want to ensure every working-class person can build a dignified life, help New Yorkers have health care and affordable housing, tax the wealthy to fund social services, and have world-class transit for people to see their friends and get to work.”

The state primary’s results sent a shiver through the state’s business community, eight months after a majority of New York City residents gave the keys to City Hall to a 34-year-old Democratic Socialist. Now, real estate leaders warn that raising corporate taxes and additional government regulations could compel some companies to decamp to other states.

“These very policies have led to population loss, diminished representation and fewer electoral votes, and created the worst housing shortage in the city’s history,” James Whelan, president of the Real Estate Board of New York, said in a statement. “Albany should learn from those outcomes, not double down on the policies that helped produce them.”

But left-leaning lawmakers are undeterred after voters have demanded significant changes from the state’s political establishment over the past two election cycles.

“We had pledged not to take real estate money, fossil fuel money or AIPAC,” Brooklyn Assemblywoman Emily Gallagher told CO, referring to a lobby promoting stronger Israel-U.S. relations. “That changes the dynamics for how lobbyists move, what kind of legislation will be championed, and expectations districts have from us.”

Each DSA and DSA-aligned legislator has pet priorities, but one policy key to their mission is increasing taxes on the wealthy and corporations to fund an expansion of social programs.

Earlier this year, Mamdani proposed boosting the corporate tax rate from 7.25 percent to 11.5 percent as well as adding an additional tax bracket for New York City residents earning more than $1 million in order to close the city’s steep budget shortfall. The DSA organized rallies in Albany to support this tax plan while both the state Senate and Assembly inserted higher tax rates in their one-house budget proposals.

But the idea went nowhere in state budget negotiations due to Gov. Kathy Hochul’s opposition.

Instead, she allowed a new pied-à-terre tax on New Yorkers’ second homes worth more than $5 million, a tax the Mamdani administration began to roll out this summer.

Now DSA legislators are regrouping. Brooklyn Assemblywoman Phara Souffrant Forrest — who introduced the Fair Share Act, which would impose a 2 percent surcharge on individuals earning more than $1 million — said she would make alterations to the scaling of tax brackets in the bill.

“We may make little changes in how we step up the taxes to 2 percent on the lower side of the brackets, so it’s not just a cliff,” she said.

But developers and lobbyists believe there will be little appetite for tax reforms next year, especially after the city’s muddled pied-à-terre notification that left thousands of homeowners scrambling to prove they lived primarily in New York City.

Steve Fulop, president of business group Partnership for New York City, cautioned that any move to increase taxes would be seen as punitive, since Wall Street’s strong performance helped close some of the state and city’s deficits.

“You should have a framework for a budget and a reason for doing a certain thing,” he said. “If New York considered a wealth tax similar to what California proposed, you’d see a mass exodus and it would ultimately lead to a larger challenge, because the budget is disproportionately carried by a small percentage of taxpayers.”

Most importantly, the governor remains skeptical of wealth taxes and retains significant control over the creation and passage of the budget. If Hochul is re-elected this year, lawmakers acknowledge she may continue to take an anti-tax stand without feeling any threat to her seat.

“The governor sees things very differently than the DSA cohort, but she sees how popular the

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FEAT U R E

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movement is and how it’s spreading across the state,” Gallagher said. “Ultimately, she can do what she wants, that’s what she has done. We’re going to push for what we want and with a lot of aggression no matter what we think she wants.”

Instead, Democratic Socialist lawmakers may find common ground with the real estate community over some housing policies.

Many DSA candidates pledged to bring more affordable housing to their districts during their primary campaigns and supported Mamdani’s goal to build 700,000 new homes across the city over the next decade.

Lawmakers also expect to reintroduce a social housing bill that proposes creating a state-run authority that would issue tax-exempt bonds to finance the acquisition of land and construction of permanently affordable homes. And some want more state resources for repairs and equipment upgrades such as heat pumps for the city’s public housing complexes after the Trump administration sought to reduce the federal housing department’s budget.

Other proposals regulating retail rents and data center siting are expected to draw heated opposition from developers and the business community.

Gallagher and Brooklyn Sen. Julia Salazar are preparing to bring back a proposal that would create a nine-member board of mayoral appointees with the power to set rent increases for new commercial leases in the city and create a right to a 10-year lease renewal.

The commercial rent stabilization bill was first introduced in 2020, but Gallagher believes it has become more necessary after longtime small businesses have struggled with high inflation and competition from national chains. More than 15,000 city storefronts are currently empty and vacancies increased nearly 30 percent since 2020 while average rents fell by only 6.5 percent, according to a 2026 report from advocacy group Small Business United.

“There needs to be more attention paid to the differences between businesses raking in billions of dollars and controlled by private equity or major international interests and shareholders, and a local mom-and-pop shop,” Gallagher said. “Because real estate has become so much about maximizing profits, we’re seeing a lot of businesses then having to compete with insane rents.”

But business leaders warn that any intrusion into commercial landlords’ ability to set rents could threaten the vibrancy of retail corridors and their surrounding neighborhoods.

“We’ve seen significant fluctuation in retail rents over the last decade, but the idea that you want to lock in for perpetuity existing users is the antithesis of a growing city,” Jordan Barowitz, principal of Barowitz Advisory and a former executive at the Durst Organization. “If you disrupt that ebb and flow, you risk undermining New York’s formula of economic success.”

The fight over data centers could be even more explosive.

In July, Hochul enacted the first statewide moratorium on permits for larger new data centers and pledged to repeal sales tax exemptions for existing facilities across the state. A majority of New Yorkers support the one-year pause, but tech companies and unions representing building trades argue the industrial properties are significant for the advancement of artificial intelligence and computing capacity and the creation of high-paying construction jobs.

Socialist lawmakers like Sen. Gonzalez, who introduced legislation for a data center moratorium and recently went on a statewide tour of hyperscalers, want a longer pause on new projects because they say the state’s electric grid cannot handle their energy demands.

“If we acknowledge this energy crisis and that we’re on the brink of rolling blackouts, there is no way to bring on 30 new data center projects,” she said. “The solution can’t be building out more fossil fuel infrastructure.”

FRIENDS IN HIGH PLACES: New York Mayor Zohran Mamdani (far left) has allies in state lawmakers such as (l-r) Emily Gallagher, Kristen Gonzalez and Phara Souffrant Forrest, who support policies like commercial rent control and higher taxes on the wealthy.

Meanwhile, business groups such as Partnership for New York City led by Steven Fulop (right) oppose such measures.

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COMMERCIALOBSERVER.COM | SEPTEMBER 1, 2026 | 33

44 WEST EI G HT H ST R EET

The Plan WHO’S WHAT AT 44 WEST EIGHTH STREET

RENDERINGS COURTESY THE BOUNDRY

DEVELOPER: T30 CAPITAL DESIGNER/ARCHITECT: INWORKSHOP CONSTRUCTION: FIRST STANDARD CONSTRUCTION SALES: THE HUDSON ADVISORY TEAM AT COMPASS

SHHH, WE’RE LUXURIATING: Developer T30 Capital’s new — and, for Manhattan’s Greenwich Village, unusually wide — 44 West Eighth Street aims for quietude and distinctness in its five units. There will be soundproof windows, for one thing, and four different designs for that quintet of condos. The sole penthouse, which could retail for $20 million, also includes a private terrace (top right).

By Amanda Schiavo Craftsmen often like to leave a bit of themselves behind in the things they create, and that is especially true at 44 West Eighth Street, a new ground-up condominium development in Manhattan’s Greenwich Village.

The exterior facade is made from handmade Petersen brick, which is sourced from Denmark, and each brick bears the thumbmarks of its maker. The brickmakers have for over 200 years used this method of hand-pressing the bricks in a wooden mold, then pushing them out, leaving a pair of thumbprints, according to developer T30 Capital and designer Idan Naor of Inworkshop.

The minds behind 44 West Eighth Street wanted to create something unique, holistic and human that honors the area’s historic significance, while bringing a modern development to the neighborhood of narrow streets and sometimes narrower buildings.

“This spot is totally irresistible for condos, mostly because of the width,” Margaret Grossman, co-founder and managing partner at T30 Capital, told Commercial Observer. “It’s 50 feet wide, 34 | SEPTEMBER 1, 2026 | COMMERCIAL OBSERVER

and it is so rare to be able to build a new building in Greenwich Village with that width. It’s double the width of a townhouse you could get here; even the very few condos that have been built here can’t offer that. We just knew that we could create these exceptionally special, very gracious condominiums with really spectacular proportions.”

There will be a total of five residences in the building, and a substantial portion of the construction is expected to be completed either late this year or early next year. The certificate of occupancy and closings are expected in the late spring or early summer of 2027.

None of the construction materials is going to waste at 44 West Eighth, either.

“We’re doing this beautiful, partially hand-pressed and partially extruded terra cotta, and, as soon as we walk into the building, we try to fold in those materials into the lobby,” Naor said. “We really try and filter the materials from the outside into the inside, so the terra cotta actually turns in and becomes the wall of the lobby.”

And any remnant from that Danish brick is being crushed to use in the lobby flooring.

“It’s this wonderful visual cacophony,” Naor said of the property, both inside and out.

Each residence will have a distinct layout. Three will be full-floor homes with four bedrooms. An upper-floor spread with two bedrooms will offer delightful treeline views, and then there’s a duplex penthouse spanning one and a half floors.

“We have four different floor plans,” Naor said. “And, because we have a really large terrace on the second floor, the bedrooms are actually facing the front, which is atypical. But it was such a great opportunity to have an amazing outdoor space back there.”

The front-facing bedrooms offer views onto Eighth Street.

Even without the soundproof windows (they hadn’t been installed yet), it is a quaint and peacefully quiet atmosphere that even provides a view of the Empire State Building.

Prices for full-floor homes start at $9.75 million, with the penthouse potentially going for as much as $20 million.

Building amenities will include a private rooftop terrace exclusive to the penthouse owner, a gym on the lower level that includes a sauna, and storage rooms for each unit.

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