Deal Size
$425.0M
Cap Rate
Est. 6.65%
$/SF
$354
Size
1.2M SF
Occupancy
—
The Jacx faces significant challenges with high vacancy rates and a major tenant, Macy's, not occupying their leased space despite continuing to pay rent. The deal's $425M price implies a cost of approximately $354 per SF, which is high given the current vacancy and the need for refinancing under special servicing. The market conditions in Long Island City are uncertain, with significant competition and potential oversupply, making this a risky investment without disclosed cap rate or occupancy data to justify the price.
Tishman Speyer appears to be pursuing a value-add strategy by repositioning the asset with its own co-working brand. However, the high vacancy and refinancing challenges suggest a risky opportunistic play.
This deal highlights the ongoing struggles in the Long Island City office market, particularly with large vacancies and refinancing difficulties. The buyer's institutional profile indicates a willingness to take on risk, but the broader market sentiment remains cautious.
$425.0M
Bank of America
Tishman Speyer
Long Island City has seen growth in residential development, but the office market faces challenges with high vacancy rates post-pandemic. The area benefits from proximity to Manhattan but struggles with office space demand.
The Jacx competes with other large office developments in Long Island City, which are also facing high vacancy rates. Recent refinancing activity in the area suggests a competitive leasing environment.
There is ongoing development in Long Island City, with new projects adding to the office supply. The market's ability to absorb this space remains uncertain, especially with current vacancy challenges.
Rent growth is likely to be subdued due to high vacancy rates and competition. Macy's paying $50/SF is a benchmark, but overall rent growth may be limited by market conditions.
There is potential to lease up vacant space and replace WeWork's footprint with Tishman's co-working brand. However, achieving full occupancy will require significant effort given current market dynamics.
High rollover risk due to Macy's subletting efforts and WeWork's exit. Replacement of these tenants with stable occupants is uncertain.
The property is heavily reliant on Macy's, which occupies 54% of the space. This concentration poses a risk if Macy's decides to terminate or sublet further.
High vacancy and tenant non-occupancy
HighTishman Speyer should actively market vacant spaces and explore flexible leasing options to attract new tenants. Engaging with Macy's to ensure continued rent payments and exploring subletting opportunities could stabilize cash flow.
“This lease underscores the enduring appeal of Rockefeller Center to New York’s investment industry, and we’re proud to continue to provide a setting that supports their long-term growth at one of the ...”
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