Located at 8 Spruce St. in New York’s Financial District is the New York by Gehry. The 76-story apartment towersports one of Manhattan’s most interestingdesigns, with the exterior appearing to becrinkled halfway down the south façade.Built in 2011, the 800-unit building, whichalso houses an elementary school, waspraised in the New York Times by criticNicolai Ouroussoff as “the finest skyscraperto rise in New York since Eero Saarinen’sCBS Building went up 46 years ago”.
And yet, according to Trepp, first-timeservicer watchlists indicate that the tower’soccupancy has fallen by more than 20%since 2019.
The $550-million loan backing theapartment has remained current throughout the pandemic and the owner has notrequested COVID relief. Still, the loan is introuble. In 2019, it posted a debt servicecoverage of 1.93 when occupancy was
98%. The loan was put on a servicer watch-list after its DSCR fell to 1.84x and occupancy dropped to 74% in the first ninemonths of 2020.
On one hand, the plight of New York byGehry could be a story about Manhattan’sstruggles during the pandemic. The borough has nearly 16,000 empty rental apartments— its highest vacancy rate in at least
14 years.
But in a larger sense the complex is alsorepresentative of the recovery in commercial real estate. It is well-known that manyeconomists have described the recovery asa K-shaped one, with some sectors of theeconomy performing better than others.That is doubly true within CRE, which hasseen certain asset classes, such as multifamily and industrial, outperform certain hard-hit sectors, such as hotels and retail.
What has been less examined is the shifting fortunes within these asset classes.
Recovery
AN UNEVEN RACE
MULTIFAMILY,INDUSTRIAL, RETAIL,SELF-STORAGE,LIFE SCIENCES ANDOFFICE CAN LOOKFORWARD TO AYEAR OF RECOVERY,PUNCTUATED BYNEW TRENDS THATEMERGED WITH THEPANDEMIC.
BY ERIKA MORPHY
