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Rockefeller Center’s $3.5B Refi Deal a Test of Investor Confidence

Rockefeller Center’s $3.5B Refi Deal a Test of Investor Confidence

Midtown Manhattan’s Rockefeller Center is pursuing a $3.5B refinancing deal, seen as a potential bellwether for the overall office market's direction.

Jordan B. & Han-Gwon Lung
October 01, 2024

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Good morning. Midtown’s crown jewel is pursuing a $3.5B refinancing deal, viewed as a key bellwether for the future of the office market. Meanwhile, the owner of the iconic Chrysler Building is poised to lose control of the skyscraper.

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Market Snapshot

S&P 500

GSPC

5,762.48

Pct Chg:
+0.42%

FTSE NAREIT

FNER

842.25

Pct Chg:
+0.20%

10Y Treasury

TNX

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SOFR

30-DAY AVERAGE

5.24701

Pct Chg:
0.0%

*Data as of 9/30/2024 market close.

ROCKY REFI

Rockefeller Center Seeks $3.5B Refinancing Deal

Rockefeller Center’s $3.5B Refi to Test Investor Interest in Office

Rockefeller Center is in the final stages of raising $3.5 billion to refinance its debt, testing the resilience of New York’s office market amid post-pandemic uncertainty.

Deal structure: Leading the refinancing effort are Bank of America and Wells Fargo through a single-asset, single-borrower commercial mortgage-backed security (CMBS), according to the Financial Times. The deal covers the 10-building Midtown complex owned by Tishman Speyer, with potential participation from the Canada Pension Plan Investment Board, signaling institutional confidence.

Midtown’s bellwether: Despite widespread challenges in the office market, Rockefeller Center shines with a prime location, 93% occupancy, and top-tier amenities like luxury retail and tourist attractions. Major tenants like Lazard, Deloitte, and NBC Studios keep the complex thriving while many other properties struggle with declining demand and values.

Zoom in: The U.S. office market has struggled post-COVID, particularly in NYC. Hybrid work has pushed vacancy rates to nearly 20% by mid-2024, up from 12% pre-pandemic. While Midtown’s vacancy rate is slightly better at 17%, it still remains elevated.

The risk: Single-borrower CMBS deals concentrate risk. If a major tenant exits or cash flow falters, there’s little recourse, and lenders are exposed. High-profile losses, like 1740 Broadway, where debt investors only recovered 74 cents on the dollar after the building sold for half its prior value, underscore the difficulty.

➥ THE TAKEAWAY

Why it matters: A successful refinancing at Rockefeller Center could signal renewed investor confidence in Midtown’s office market, influencing other high-profile assets like the MetLife Building and Hudson Yards. However, this won’t be an easy win for Tishman—investors remain cautious after the Federal Reserve’s rate hikes, which have made office properties a riskier bet in an already struggling market.

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✍️ Editor’s Picks

Manhattan mayhem: The owner of the Chrysler Building is facing a $21M rent default, with Cooper Union poised to reclaim the iconic NYC landmark.
Fear and Greed: The Q224 Burns + CRE Daily Fear and Greed survey results are in. Download your FREE copy to see how sentiment is shifting.
Hybrid bonds soar: Real estate bonds, including risky hybrids, have surged with returns surpassing 75%, and some have even outperformed Nvidia’s stock by 20% amid central bank policies.
Housing forecast: Goldman Sachs (GS) predicts a five-year recovery to more affordable housing, with home prices set to rise by 4.5% in 2024.

🏘️ MULTIFAMILY

The new yardstick: The HUD released its 2025 Fair Market Rents (FMR), with only a 4% average increase this year. Small-area FMRs also expand, impacting affordability and income limits.
Residential resurgence: Veris Residential (VRE) is considering its options for Jersey City Urby, a $450M complex with 97% occupancy, amid rising investor interest and a potential refinancing.
Rent plunge: New apartment rents fell 6.2% in 2Q24, marking the second sharpest decline in five years due to an oversupply of new units.

🏭 Industrial

Innovating digital: One Wilshire, a key data center in LA, reflects the surge in demand for digital infrastructure amid global growth.
Logistics leap: Amazon (AMZN) purchased a 625 KSF warehouse near Denver Airport for $91.1M, expanding during a national warehouse market slowdown.
Cargo crisis: A potential International Longshoremen's Association strike at 36 ports may disrupt 50% of all ship cargo, impacting retailers and the global economy.
Phoenix boom: LaSalle Property Fund bought a fully leased 321.89 KSF Phoenix industrial building for a Tempur-Pedic (TPX) distribution center.

🏬 RETAIL

Retail expansion: Benderson Development bought the grocery-anchored The Shops at Midtown Miami for $83.8M, which has a 98.3% occupancy rate and 3.4M annual visitors.
Sparkling expansion: Lugano Diamonds secured a deal for the first Chicago store in Gold Coast, occupying 100–104 E Oak Street. Luxurious, exclusive shopping experience.
Shopping spree success: The Sterling Organization acquired a $180.5M, 994 KSF portfolio of shopping centers in Atlanta, DC, and San Antonio.

🏢 OFFICE

Yogurt empire expands: Chobani (CHO) secured a 121 KSF at 360 Bowery, Noho, for boutique office space with luxurious amenities, expanding from Lafayette St.
Cities on the rise: In August 2024, Atlanta had the highest YoY office visit growth at 7.3%, outperforming other major cities like Miami and NYC.
Foreclosure frenzy: At least seven commercial properties in Harris County are facing foreclosure with $260M in mortgages at auction on Oct. 1st.

🏨 HOSPITALITY

Chetrit troubles: Brothers Joe and Meyer Chetrit are facing a $6.5M guarantee lawsuit from Mack for a defaulted $31.5M loan on Hotel Carter in NYC.

📈 CHART OF THE DAY

CBRE Econometric Advisors' hurdle rate model shows how the relationship between expected 10-year returns and the hurdle rate across sectors has evolved. A score above 1 indicates that returns exceed the hurdle rate. Historically, only the industrial sector surpassed 1 due to dramatic yield expansion from 2022 to 2024.

Currently, most sectors, except for office, are seeing improved investment potential as value loss stabilizes, while elevated vacancy rates and delinquencies still challenge office market returns.

FACT OF THE DAY

Did you know the Willis Tower (formerly Sears Tower) in Chicago has over 16,000 windows? Cleaning all of them takes a team of workers about nine months to complete—by the time they’re finished, it’s time to start again.