More office fallout from WeWork cratering

CIM Group hands back keys to NY building, SF building loses 84% of value due to coworking firm’s travails

More Office Fallout Due to WeWork’s Rework
RFR’s Aby Rosen and Kushner Company’s Laurent Morali and Nicole Kushner Meyer with a WeWork office (Illustration by The Real Deal with Getty, Kushner)

OCT 21, 2023, 7:00 AM


  • Ted Glanzer

Nowhere is office distress more evident than with WeWork, which, despite its name, isn’t working at all.

Indeed, the coworking firm could be renamed “ReWork” after its staggering losses have forced it to renegotiate nearly all of its leases.

Landlords that count WeWork as a top five tenant owe about $2.6 billion in CMBS debt, an analysis of Trepp data shows. About half of those loans come due within 12 months and nearly 80 percent are either watchlisted, delinquent or in default.

Kushner Companies and Aby Rosen’s RFR are already weathering the fallout of a WeWork departure. The landlords failed to refinance their Dumbo office complex and landed in maturity default last month. WeWork had ditched a majority leasehold in one of the portfolio’s four buildings.

CIM Group, caught in a perfect storm of remote work, rising interest rates and WeWork exposure, is handing the keys to 1440 Broadway back to its lender.

The Los Angeles–based landlord, which picked up the large office property with Australian pension fund QSuper in 2017, saw the $399 million loan backed by the Midtown building go to special servicing this month, according to Trepp.

“The special servicer comments are not encouraging,” a Trepp email alert reads, noting that WeWork, which had been the building’s top lessee, has vanished from the tenant list. A WeWork spokesperson said the firm is still a tenant at 1440 Broadway and a change in building ownership would not affect that.

The CMBS loan had gone to a special servicer because “there is no single lender to negotiate with and the loan must first be transferred to special servicing in order to enter into any negotiations,” CIM said in a statement. 

432 Park Ave unit, once priced at $135M, sells for $65M

Sellers barely north of breakeven on Hiroshi Sugimoto–designed apartment

Sellers Break Even in $59M Sale of 432 Park Avenue Condo
432 Park Avenue (Getty)

OCT 23, 2023, 2:45 PMUPDATED OCT 23, 2023, 5:00 PM


  • Harrison Connery

After two years on the market, the 79th floor unit at 432 Park Avenue has sold for less than half its original asking price.

The 8,000-square-foot apartment at the Macklowe-CIM supertall sold to an unknown buyer for $65.6 million, according to property records, after having hit the market two years ago with an asking price of $135 million. Two studio units were also sold separately as part of the deal, bringing the total transaction price to $70 million.

The asking price was lowered in May to $92 million and went into contract in August. The sale price is roughly what the sellers paid for the apartment in 2016.

Listing agent Noel Berk of Engel & Volkers declined to comment, but previously told The Real Deal the unit was being marketed to Asian buyers returning to the city post-pandemic.

The 79th-floor unit was designed by Japanese architect Hiroshi Sugimoto, who imported weather-beaten stones from Kyoto and old growth Canadian Hinoki Cypress wood. The five-bedroom, five-bathroom home also has a tea room and bonsai plant sculpture.

The sellers, who have hidden their identity behind a shell corporation, aren’t the first in the building to reconsider their asking price. It is unclear whether the reductions are attributable to initially aspirational pricing, a high-profile lawsuit alleging condo defects, fatigue in the ultra-luxury market or other factors.

In the lawsuit, the condo’s board blamed developers CIM and Macklowe Properties for flooding, eerie noises and an electrical explosion.

Saudi retail magnet Fawaz Alokair listed his top-floor penthouse for $170 million in 2021, then pulled it off the market before relisting it last year for $130 million, according to Streeteasy. The owners of an 84th floor unit who paid $21.4 million in 2016 have cut their asking price to $15 million from the $18 million they sought in February.

Another drama at the controversial building pits its development partners, CIM and Macklowe Properties CEO Harry Macklowe, against each other. CIM wants to foreclose on Macklowe’s personal residences in the building, accusing him of defaulting on $46 million in loans it gave him for three units.

Macklowe says CIM swindled him out of $110 million in distributions he’s owed as a developer. This month he delayed a foreclosure auction on his units by putting them in bankruptcy protection.