Scott Rechler

Scott Rechler dove headfirst into office this past year-plus when a lot of others stayed away.

RXR partnered with Ares Management in January 2024 to form a $1 billion fund to buy distressed offices around New York City, with a particular focus on finding the right properties that just need a little bit of help.

“This isn’t a macro bet, just put all of your chips down on office,” Rechler said, adding that it’s now working on five transactions related to the fund. “It’s very focused on specific buildings and specific submarkets.”

It’s not just about future bets for RXR. The landlord inked 2 million square feet of leases last year, including some of the largest signed in the city: Davis Polk & Wardwell’s 710,000-square-foot deal at 450 Lexington Avenue, and Ralph Lauren’s 225,750-square-foot renewal at the Starrett-Lehigh Building at 601 West 26th Street. 

RXR also was proactive when WeWork — which leased space in several of its buildings — filed for bankruptcy, striking a deal with the coworking company on the eve of its Chapter 11 filing to allow RXR to negotiate directly with WeWork members in its portfolio to move to direct deals. That led to mobile bank app Current signing on for 71,692 square feet at 620 Avenue of the Americas.

Speaking of Avenue of the Americas: RXR was able to lock down perhaps the largest refinancing of 2023 at 1285 Avenue of the Americas when it modified its $1.2 billion loan, pumping in $220 million of equity to bring the loan balance down to $980 million.

But RXR didn’t get through 2023 completely unscathed. The company continued to reassess its office portfolio, in what RXR calls “Project Kodak,” to rid itself of obsolete properties. The company, too, defaulted on its loan at 61 Broadway (which Rechler said is nearing a resolution), and the CMBS loan tied to the Helmsley Building at 230 Park was transferred to special servicing in November (which Rechler said is still being worked out). 

“In my mind, it’s always better to be transparent,” Rechler said about “Project Kodak.” “It sets the framework for where the conversations are.”