Sunday Summary: Eric Adams Had a Pretty, Pretty Bad Week

Wednesday night, as Commercial Observer staff supped a long-anticipated group dinner at a popular Brooklyn restaurant, a shocked cry went up:

Mayor Eric Adams had been indicted on five counts of bribery and soliciting illegal campaign contributions.

“This is not surprising to us at all,” the embattled Adams said the next day at a press conference. “The actions that have unfolded over the last 10 months — the leaks, the commentary — this did not surprise us that we reached this day, and I ask New Yorkers to wait to hear our defense before making any judgments. I know I don’t violate campaign [laws], I know I don’t take money from foreign donors.”

Adams might be right that this wasn’t surprising. For the last few weeks, aides and city appointees have been resigning or charged with similar offenses, so the look of shock on our marinara-smeared faces was probably a little overly dramatic. (Plus, CO had less than two weeks before explored the possibility of a New York without a Mayor Adams.)

Still, it was a particularly crushing blow to real estate professionals who had found in Adams a champion of development. The very morning of Adams’s indictment, the New York City Planning Commission had voted 10-3 to approve the residential zoning changes that the administration has dubbed “The City of Yes.”

What happens next is anyone’s guess. But for those who were expecting a smooth glide path for the many promised reforms in the City of Yes, the situation just got far more complicated.

… RFR’s week wasn’t so great either

While there has been some welcome news in the last two weeks with the Fed’s interest rate reduction and we’ve certainly seen some big sales and financings, no one should think that CRE is out of the woods yet.

Serious owners like Clipper Equities are still allowing their loans to fall into delinquency, such as the $100 million CMBS one Clipper has at 141 Livingston Street.

And institutions are still battling with one another over the cash tied to their properties, like the fight between RFR and Cooper Union over one of the most prized jewels in New York: the Chrysler Building.

On Friday, Cooper Union, which owns the land under the Chrysler, sent RFR a 10-day termination notice for not having paid $75.7 million owed on the ground lease.

“RFR remains committed to the Chrysler Building for the long term, in keeping with the firm’s history of excellent restoration and stewardship of architectural landmarks,” said a spokesperson for RFR. “To date, RFR has invested over $240 million of its own capital into the property and is committed to working with Cooper Union to bring this iconic skyscraper back to stable and healthy financial standing.”

We’ll see how that works out.

A pretty, pretty good week for leasing

Is it us, or did Manhattan leasing sort of crush it last week?

Exhibit A: Vanderbilt University announced a 150,000-square-foot satellite campus at the General Theological Seminary on West 21st Street in Chelsea.

Exhibit B: The New York City Department of Aging took 80,000 square feet at 14 Wall Street.

Exhibit C: Catholic Charities of the Archdiocese of New York expanded its headquarters to 77,130 square feet at 80 Maiden Lane in FiDi.

Exhibit D: InMocean Group, the swimwear maker, expanded its digs to 64,806 square feet at 463 Seventh Avenue.

Exhibit E: Cole Haan signed an 11-year renewal for its 62,262-square-foot headquarters at 620 Avenue of the Americas.

That’s five leases over 50,000 square feet. And there were another five above 20,000 square feet, including Arte Museum taking 51,979 at Chelsea Piers; Weaver & Tidwell banking 36,500 at Penn 1; Hawkins Delafield & Wood grabbing 26,210 at 140 Broadway; the Lyceum Kennedy International School expanding its presence to 21,950 square feet at 815 Second Avenue; and the 32BJ Service Employees International Union expanding to 20,788 square feet (also at 620 Avenue of the Americas.)

Can we talk about something other than New York?

We’re glad you asked, because last week CO published our annual list of the 25 most powerful players in Southern California real estate. And the list is worth a long leisurely look this Sunday.

It was a strange time to do a list like this about L.A. Yes, there have been massive defaults on iconic properties, abandoned megaprojects, seemingly unsolvable homeless problems, and all sorts of other clouds on the otherwise ceaselessly sunny Southern California horizon. But there’s actually some reason to think that the worst might be over.

Only about 2 million square feet of office is set to be delivered in Los Angeles over the next five years (according to JLL (JLL)’s David Fan) and 60 percent of it is already rented, which will hopefully stoke demand.

Plus, some of the deals are already happening, like 4 million square feet of leasing in West L.A. and another 3 million in Downtown L.A. Relatively decent numbers.

Rents in Century City have gone up 60 percent since 2018, and Fairfax is getting a $1 billion Television City live-work project, which will almost certainly goose the nearby demand.

And, while many have been waiting for the bottom to fall out of SoCal industrial’s seemingly endless ascent (and while, yes, there was a recent slowdown), vacancy remains on the decline and activity has been picking up.

Savvy, self-made developers like Leo Pustilnikov are beginning to use California’s “builder’s remedy” rule, too, to bypass local NIMBY activists on zoning boards to build much-needed housing.

And figures like Casey Wasserman are certainly going to bring some razzle-dazzle to Tinsel Town when it hosts the 2028 Olympics — and with it a lot more lodging.

Which is our way of saying, “Hooray for Hollywood!”

See you next week.