Century-Old FiDi Office Building Faces Foreclosure
An historic office building in the Financial District is facing foreclosure, after the developer who purchased it for $330 million a decade ago defaulted on a mortgage of $240 million at the start of this month.
The 32-story building at 61 Broadway was bought by RXR Realty nearly ten years ago, after changing hands several times in the caffeinated Lower Manhattan real estate market that followed the terrorist attacks of September 11, 2001. In 2004, the tower was sold for $130 million. Earlier this year, RXR executives speculated about possibility of converting the 670,000-square-foot building into apartments, a fate that may yet await the 1914 structure, as part of a wave of similar conversions of nearby office towers to residential use.
As reported by The Real Deal property industry newsletter, RXR stopped making payments on its mortgage for 61 Broadway last December. But the actual default on this loan was triggered in the first week of May, when the loan reached maturity and was scheduled for full repayment. A spokesman for RXR did not respond to a request for comment.
In a separate (but related) development, a new report from global commercial real estate services company Jones Lang LaSalle estimates that the conversion of office towers into apartments could create more than 32,000 new units of housing in New York City.
The analysis, titled “The Future of the Central Business District,” documents that New York is among the urban centers where office properties continue to experience the greatest residual distress from the Covid pandemic and the shift to home-working that it sparked. The report indicates that New York office use is still 54 percent lower than in the period prior to the crisis. This means that New York is tied with Washington, D.C. for the third-worst rates of return to offices. Only Los Angeles (at 55 percent) and San Francisco (at 58 percent) lag further.
The same report notes that among global cities, New York’s central business districts are second only to Hong Kong in the percentage of office stock constructed prior to 2015. This is significant because older office buildings, often perceived as obsolete, are widely viewed as ripe for conversion to other uses, such as apartments. (In New York, 94 percent of all office buildings were built prior to 2015. In Hong Kong, the corresponding metric is 97 percent.)