There’s been a general nervousness in the real estate market since the much pored over and much lamented “Liberation Day” of April 2.
The sensible play is to just wait things out. After the sturm und drang of the first weeks — where tariffs moved up and down in step with one’s blood pressure — it would be wise to take a step back. Don’t act too quickly. Stick to one’s knitting.
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That’s also a way to miss out on golden, once-in-a-career opportunities.
For example, last month during the height of market nervousness, RXR got off the bench and signed a letter of intent to buy the 1 million-square-foot 590 Madison Avenue. The price was a glittering $1.1 billion. This was an echo of the good old days when it wasn’t so unusual for an office building to cross the nine-figure mark.
“If rents continue to go up for 10 years in New York, [RXR will] do fantastic,” said Chad Carpenter of Reven Capital on the pending sale. “If rents go down for a few years, maybe [RXR will] be soft. But, if rents go down for 10 years, it will be a disaster. You just don’t know.”
Indeed, this is a great moment for the contrarian investor. (Carpenter himself qualifies as one. He launched a $1 billion REIT last year with an eye on distressed office properties.)
RXR’s Scott Rechler essentially made the argument a few days before news broke about 590 Madison at a Commercial Observer forum.
“That’s been an opportunity for us, because when you have that sort of dislocation, most institutions find office to be an uninvestible asset class,” Rechler said. “And, when institutions find something uninvestable, that’s a good time to invest because that means you have less competition.”
As it turns out, there are a number of contrarians out there, because we saw a lot of bold moves from players refusing to stick to their knitting last week.
In Miami, The Melo Group plunked down $211.5 million for 2.8 acres of land in Brickell from Swire Group that had originally been slated to be a swanky new office.
Also in South Florida, Related Group landed $230.8 million in construction financing from Apollo Global Management for a 47-story, 163-unit condo they’re calling Andare Residences — which would be the tallest building in Broward County.
In Gotham, CO learned that Vanbarton Group is in contract for $140 million to buy 6 East 43rd Street from Milstein Properties with an eye toward an office-to-resi conversion.
Uptown, Clipper Equity shelled out more than $50 million for an empty development site at 1800 Park Avenue in Harlem from the Durst Organization. (The site contains more than 680,000 buildable square feet.)
Blackstone is making a play for a 49 percent stake in 1345 Avenue of the Americas and got $850 million in CMBS financing for it.
Over the water in Brooklyn Heights, SomeraRoad purchased the historic 282-key Hotel Bossert (which had been foreclosed on by the previous owner’s lender Beach Point Capital) for $100 million, also with plans to convert into housing.
In Southern California, Palisade Group and Benefit Street Partners have purchased the fully leased, 544,705-square-foot Garfield Business Center in the City of Commerce for $97 million from Terreno Realty.
In L.A.’s Koreatown, Jamison scored $220 million in financing for Opus, its planned two-tower, 428-unit luxury residential project at 3545 Wilshire Boulevard.
And Greystone landed the largest commercial real estate collateralized loan obligation in the firm’s history, worth $901.3 million and secured by 28 bridge loans on more than two dozen residential properties scattered across the country.
Retail redux
If you were still feeling the glow of ICSC, allow us to splash a little cold water on your face.
A new report from Placer.ai says that foot traffic is down at retailers across the country since Liberation Day.
“For those retailers who announced price increases, we did see consumers push back and visitation trends decline after those price increases,” said R.J. Hottovy, head of analytical research at Placer.ai. “Consumers are very aware, [and] they’re following the news on tariffs and trying to get ahead of it as best they can.”
It’s not across the board. Discount retailers like Burlington actually saw a rise of 6.5 percent in foot traffic during the first quarter of 2025. But foot traffic at more expensive brands like The Gap, Old Navy, Banana Republic and Athleta dropped 3.8 percent.
And, while it has little to do with Liberation Day, another retail institution — the 3.5 million-square-foot American Dream Mall in New Jersey — had some less than positive news to report this week: The megamall revealed it had an assessed value of $2.5 billion, which is about $800 million less than its last valuation.
That being said, there are positive retail developments to report.
Samson Management signed Liberty Food Hall to a 4,000-square-foot lease at 120 Liberty Street in the Financial District.
A few blocks north, Goody’s, a French restaurant, signed a 15-year, 5,000-square-foot lease at the Woolworth Building.
Finally, AEW Capital Management got a new head of retail in Lauren Holden, who is coming from ShopCore Properties, where she was executive vice president and chief operating officer.
Residential revisited
New York’s residential scene got a much-needed boost this week.
The New York City Council approved the Atlantic Avenue Mixed-Use Plan, which was championed by Mayor Eric Adams and designates a 21-block span of Atlantic Avenue as eligible for housing. It’s anticipated to result in 4,600 new apartments (1,900 of which would be affordable) as well as another 800,000 square feet of commercial space.
This was very much a topic on CO’s mind as we rolled out our inaugural residential development forum — even though the price points discussed were normally higher than affordable in this case.
“We always believe that the best time to build in New York is counter-cyclically,” said Alchemy Properties’ Kenneth Horn on his panel “The State of New York City’s Housing Market: Market-rate, Condo & Ultra-Luxe.” “When no one is building, that’s when you build because your product will be delivered when there’s a scarcity of either condominiums or rental units.”
Hey, that’s contrarian!
Sunday reading
Did you hear that the legendary law firm Kramer Levin was merging with London- and Sydney-based law firm Herbert Smith Freehills… today!
It’s a major expansion for the firm. In terms of revenue and operations, the already formidable Kramer Levin will leap into one of the top 25 firms in the world.
Kramer Levin’s Jay Neveloff and Dan Berman sat down with CO to explain a little about what the merger would mean for commercial real estate.
We imagine that given the lineup they’re forging they won’t worry about AI coming to take their jobs. (Which might become a thing for law firms, actually. At least in document review.)
But, if you’re looking for a deep dive this Sunday into an asset class that has been riddled with problems, check out CO’s article about how private equity firms and a real estate investment trust have been loading up hospitals with debt and leaving them on life support.
See you next week!
