Sunday Summary: OK, the Diet Begins Today

One would think that with Thanksgiving and Black Friday, the real estate drones of New York City would have taken a few days off, eaten turkey, watched football and bantered good-naturedly with the in-laws . . .

But no!

Short week as it was, it’s a crazy good market out there — and the holiday could not slow the pace of deals. (“New York is back — period,” declared Vornado Realty Trust’s Glen Weiss at Commercial Observer’s Fall State of Office Forum on Nov. 20. We concur, and would only note that it’s not just in New York that the office market has been rebounding.)

Exhibit (a): Refinancings.

Rudin spent last week putting the finishing touches on a $350 million recapitalization for 845 Third Avenue.

Exhibit (b): Leasing.

An expansion to the tune of 114,562 total square feet is always a good week — as was the case for EQT Partners at SL Green Realty’s 245 Park Avenue. And then there was the sports media company Overtime gobbling up 41,000 square feet at Two Trees Management’s 20 Jay Street in Brooklyn. Score!

Exhibit (c): Sales.

Take your pick — AM Management, Eyn Holding and Axonic Capital plunking down $133 million for 114 West 41st Street, or, Capstone Equities’ $80.8 million purchase of 322-326 Seventh Avenue from Corem Property Group. Either way, trades are happening!

Of course, it’s not just New York and not just office where the cash is flowing. Down in South Florida, Naftali Group closed on $465 million in construction financing ($235 million of which was C-PACE financing) for the firm’s 67-story luxury residential tower at Miami Worldcenter; Crow Holdings Capital and Constellation Real Estate Partners received $74 million in refinancing for their 799,000-square foot industrial complex Constellation Trade Center in El Paso, Texas; and 13th Floor Investments, Key International, CDS International Holdings and Wexford Capital received $79.2 million in construction financing for a multifamily development named Skye in South Florida.

Gone but Not For-Cotton

We learned last week that Rick Cotton, the long-standing executive director of the Port Authority of New York and New Jersey, is retiring in 2026 after eight and a half years. (Which, as far as Port Authority executives go, is a Methuselah-like tenure.)

Cotton can boast that he oversaw the authority’s $50 billion investment in JFK, LaGuardia and Newark airports and another $10 billion for the redevelopment of the Port Authority Bus Terminal.

“Rick Cotton has been responsible for building more of the metropolitan region than most human beings, short of Robert Moses, can claim credit for,” noted the New York Building Congress’ Carlo Scissura. “And he did it through partnership, with strategic leadership and with a vision of the future that always drove innovation. He’s a titan of our industry, an infrastructure czar and, personally, a mentor to me. He leaves behind a legacy of taking our airports from worst to first, securing our shores and building a better-connected Port Authority region.”

Transit is certainly something we’ve been thinking about — and not just because of holiday travel. (Speaking of holiday visits, those who were planning on staying somewhere using Sonder are, to use a vulgar acronym, S.O.L. You should read our ticktock of Sonder’s demise here.)

Free buses were perhaps the cornerstone of Zohran Mamdani’s successful run for mayor earlier this month, and CO decided to try to figure out just how feasible the proposal was.

Well . . . it has been done before. There are test cases like Chapel Hill, N.C., Alexandria, Va., Fayetteville, Ark., Bozeman, Mont. and Breckenridge, Colo. But on a scale of the 8-plus million that live in the five boroughs? No. (Although, in fairness, during the pandemic bus fares were generally unenforced in Gotham.)

“The city can cover the cost of some of the things that it might want to do in the transit space, but it will come out of the city’s budget,” warned former New York DOT Commissioner Polly Trottenberg at a New York University event in November, “either the city has to find the revenue for it or make some tough choices.”

Let’s talk about retail.

Black Friday might be over, but we’re not finished talking about retail. (What about Cyber Monday? And ICSC? Yes, ICSC, the retail conference of all retail conferences, is landing at the Javits Center in New York City on Dec. 10 and 11, and it has us in a retail frame of mind.)

It’s not just the one-off leases, like Blank Street Coffee opening its largest shop at Rudin’s 32 Avenue of the Americas; or Janie’s Life-Changing Baked Goods moving to 434 Amsterdam Avenue on the Upper West Side; or the luxury designer Jacob Cohen taking the old Michael Kors space at 792 Madison Avenue (all of which happened last week), but there are bigger trends that we’d like to note.

For one thing, while holiday shopping might have officially kicked off with Black Friday, the truth is that retailers went into holiday mode at least a month ago, and that’s probably going to be the case going forward.

“I’m shocked every year at how much earlier sales come,” said Starr Associates’ Shaun Pappas. “But this year seems like it’s as early as it’s been. At some point we’ll be shopping for Christmas in August.”

And the crazy thing is that it has been working. Foot traffic in shopping malls rose 2.4 percent in October (three times the national rise for retailers), and the National Retail Federation is predicting sales will rise annually between 3.7 percent and 4.2 percent in November and December, with total sales that could reach as high as $1.02 trillion. (Last year Americans spent $976.1 billion in holiday shopping.)

It’s no wonder that developers are seeing potential in the retail corridors of yore — like, say, Lincoln Road. While the strip of prime South Florida had garnered blue chip tenants like Apple and Nike a decade ago, it fell on hard times in recent years, with vacancy falling to the mid-70 percent rate, and some real estate trading for 40 percent of what they had previously.

But is that changing?

We’ve started seeing some investment. Michael Comras is apparently in the middle of a big buy. The City of Miami Beach, along with various local owners, is spending tens of millions of dollars to upgrade and beautify the streetscape. And some trendy retailers have returned, like the restaurant Mila, which did an ungodly $49 million in sales last year.

But there is still a ways to go. “The landlords, who are now taking on the responsibility to bring back Lincoln Road, have to offer creative deals,” said Felix Bendersky, the owner of F+B Hospitality Leasing. “For a small place, you have to do $3 million, $6 million in sales — and a lot of operators are not doing those types of numbers right now.”

We’re staying tuned.

See you next week!