Vacancy Rate at Iconic Manhattan Tower with 899 Apartments Hits 26%: This Shows How Fast & Massive the Exodus Has Been

Then there’s the “single-asset” commercial mortgage-backed security (CMBS) backed only by the mortgage of this tower.

By Wolf Richter for WOLF STREET.

This is now happening in apartment towers in big densely populated cities around the US: Suddenly mind-boggling vacancy rates as a large number of tenants have left in recent months. And this is happening even at the best of them. And holders of the commercial mortgage-backed securities (CMBS) are waking up.

The iconic “New York by Gehry” 76-story tower on 8 Spruce Street in the Financial District of Manhattan, designed by architect Frank Gehry and built in 2011, with 899 apartments, plus an elementary school for 600 kids occupying the first five floors, had an occupancy rate of 98% in 2019. By September 2020, the occupancy rate had plunged to 74% – roughly 234 units of the 899 units were vacant!

The photos of the tower with the wrinkled-appearing stainless-steel exterior are from New York by Gehry’s website, which itself lists only about two dozen apartments for rent, ranging from a studio at $2,160 a month to a three-bedroom on the 71st floor for $11,229 a month. No way that it would list all 234 units. That type of catastrophic info is essentially a secret.

The plunge in the occupancy rate caused the mortgage, which was securitized in 2014 into a single-asset commercial mortgage backed security (CMBS), to be put on the servicer watchlist in November, citing the plunging occupancy rate as one of the reasons, according to a note this morning by Trepp, which tracks CMBS.

When the $550-million mortgage was securitized in 2014, the building was “valued” at $1.1 billion. But when properties get in trouble – as mall and hotel properties have amply shown – those “valuations” at the time of securitization quickly turn into a hoax, and new appraisals cut valuations far below the original valuations and often below the loan amounts.

The 32-year $550-million loan matures in 2046 and is interest-only until the “anticipated repayment date” in 2024. It is the only mortgage in the CMBS, which was issued by the New York City Housing Development Corporation (NYCHDC 2014-8SPR) – meaning that this CMBS offers no diversification for investors; they’re exposed to the fate of one mortgage, collateralized by one iconic apartment tower with plunging occupancy.

The $550-million CMBS includes $346 million of taxable bonds (classes A, B, and C) and $204 million of tax-exempt bonds (classes D, E, and F), according to Fitch. As part of the deal to be able to issue tax-free mortgage bonds, all units are subject to the New York City Rent Stabilization Law.

On August 13, when Fitch reaffirmed its “AAAsf” rating – the highest on Fitch’s scale – of class A of the CMBS, the only tranche it rates, it ironically cited the occupancy rate as of March 31, which had dropped by then (from 98% in 2019) to 95.4%, meaning at the end of March roughly 41 apartments were vacant.

But in the six months through September, the occupancy rate plunged to 74%. With roughly 234 vacant apartments by September, in six months, the tower had lost a net of 193 tenants, or 21% of its tenants. That’s how fast this went.

Fitch also pointed at the additional risks associated with single-asset CMBS which are “more susceptible to single-event risk related to the market or sponsor.” This “single-event risk” is playing out now, namely the sudden plunge in occupancy. So maybe Fitch should give its AAAsf rating another look.

According to Trepp, the mortgage remains current and no Pandemic relief has been requested. When a mortgage is moved to the servicer watchlist, it is a sign that the servicer has concerns about the mortgage, such as the plunge in occupancy rates, and therefore the associated plunge in cash flow from the property, potentially affecting the landlord’s ability or willingness to make mortgage payments.

The landlord is Brookfield Properties. If push comes to shove, they know what to do. Commercial mortgages are non-recourse; lenders only get the collateral: At least 11 malls owned by Brookfield Properties are delinquent or are seeking debt relief on at least $2 billion in CMBS debt. The lenders ultimately carry the risk and may end up with the property.

Whatever happens to this mortgage and the single-asset CMBS backed by it, this example shows just how fast those apartment towers have been emptying out during the Pandemic, going from 95.4% occupancy at the end of March, when people were already bailing out of Manhattan, to 74% in September, suddenly leaving roughly 234 units vacant.

And these people that left apartment towers, along with the people that left similar condo towers where they’d rented or owned (or still own) a condo, have to go somewhere – and many of them ended up in single-family houses in the suburbs or further afield, thereby creating the mind-boggling land rush that started over the summer.

People are massively striking out on their own. But new businesses with planned wages have been getting scarcer since 2007. Read… This Spike of New Businesses is a Doozie, on Several Levels

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  130 comments for “Vacancy Rate at Iconic Manhattan Tower with 899 Apartments Hits 26%: This Shows How Fast & Massive the Exodus Has Been

  1. 2banana says:

    The New York City Housing Development Corporation issued tax payer backed interest only loans (some of them back by tax exempt bonds) so that a developer could build a tower with high end apartments – some of which rent for $11,229 a month.

    Did I miss anything?

    • Anon2017 says:

      Yes you did miss something. The article does not say that the bonds are tax payer backed.

      • Nacho Libre says:

        Not so fast Anon2017.

        Who did the housing development corporation sell the debt to? I’d bet largely to city pension funds. When the underlying mortgage defaults, who will be left to make the pension whole?

        Housing development corporations are corrupt as hell. Perhaps Wolf will write about them in future.

    • char says:

      Also 2k a month does not sound high end to me for Manhattan, NY

  2. 2banana says:

    I will bet a high end steak dinner that this tower was never 95.4% “occupied.” That at least half of the apartments were owned by speculators, flippers and short term rental investors.

    And they fled, folded or foreclosed when things went south.

    Easy way to find out. Is there a picture of this tower, at night around 8 PM, on a Tuesday in winter? We can count the lights on.

    “going from 95.4% occupancy at the end of March, when people were already bailing out of Manhattan, to 76% in September, suddenly leaving roughly 234 units vacant.”

    • Wolf Richter says:

      “That at least half of the apartments were owned by speculators, flippers and short term rental investors.”

      These are all rental apartments. The entire tower is owned by Brookfield Properties, the only owner.

      • MCH says:

        That’s even better, NYC can turn it into subsidized housing after Brookfield goes bankrupt, and the property are bought at pennies to the dollar and then doled out based on size of families. This loosens up the problems in NYC with housing, cause nothing is better than public housing. Possibly even removing some of the need for rent control.

        As for Brookfield, they should be allowed to go under, because that’s how capitalism is supposed to work.

        • Wolf Richter says:

          Brookfield won’t go under. They’ll let the building go back to the lenders. These mortgages are non-recourse. Lenders only get the collateral. Brookfield is already shedding lots of malls that way. Jingle mail. The risk is with the lenders.

        • MCH says:

          Well, good thinking on the part of Brookfield then. So, the lenders are stuck with the property which they might end up writing off. The end result will be the same. More housing for NY market. The only question is if rent control will stay in place.

    • td says:

      Brookfield is a very large company with several layers. I imagine Brookfield Property is a creature of Brookfield Asset Management. The empire has a large number of assets in many places. Some will crash and get abandoned, while others will gain mightily in other markets. They’ve been playing these games successfully for a long time.

  3. Joe Saba says:

    they came to our Red state making it purple to left
    from ARIZONA
    raising rents as fast as possible on this sub-class

    • KGC says:

      Get used to it. They did it to Washington and Oregon back in the 1980’s. The California middle class is smart enough to know they can afford to live very well outside that State and they can afford to buy their way into State and local politics as well due to the housing bubble. Idaho, Montana, Arizona; those are the next Blue States 10 years from now. And those of you born and raised there are going to suck it up. Heck, you’re even going to give them tax breaks to bring their companies into your town, and raise your housing prices and increase the tax base.

      • VintageVNvet says:

        Been happening in FL for eva kgc!!
        As you say, better ”get used to it” cause it’s not going to stop now, that’s for sure.
        With all the benefits you cite for those folks born and raised and always lived here, especially those whose homes were ripped away by the incredible tax rises early on, before We the Peedons insisted on an amendment to limit the property taxes yearly increases.
        And, to add to the fun, just consider what all the money escaping from foreign lands will do to your local housing, just exactly as it has done for CA and parts of FL so far…

    • IdahoPotato says:

      Let’s see.

      According to a 2020 Rockefeller Institute report, over four years, 2015 to 2018, New York taxpayers paid $116 billion more in federal taxes than the state received in federal funding. During the same period, Kentucky received $148 billion in federal funds more than Kentuckians paid in federal taxes.

      Here’s an example from the 2020 CARES Act.

      *76% of the top 25 states that received the largest average payments were red (19 are red states, 4 are purple, and 2 are blue)

      *80% are red states (12 are red states, 2 are purple, and 1 is blue)

      * Top 5: 100% are red states (Utah, Idaho, South Dakota, Nebraska, and Wyoming)

      Average Stimulus Payout:

      Idaho: $1867
      KY: $1747
      AZ: $1723
      CA: $1656
      NY: $1618

      Red States are net takers. And whiners to boot.

      I, personally, am grateful for all the money sent to Idaho from the Blue states. Thank you.

      • A says:

        “Red States are net takers. And whiners to boot.”

        Yep, red states are full on socialist and the blue states foot the bill for them.

        • El Katz says:

          Mr Potato… now take out NYC, SFO, Seattle, Portland, and recalculate those numbers. You might be surprised at the outcome. As an example, Bend, OR is nicknamed “Poverty with a view”.

        • IdahoPotato says:

          El Katz,
          I am Ms. Potato. Thank you.

          Take out all the densely populated areas out of a state that generate the most revenues and let’s look at all the sparsely populated areas. Makes zero sense to me.

        • El Katz says:

          Well, Ms Potato…. take out the high income areas to compare apples to apples. Those cities are where the major corporations reside and the corporate taxes are the lion’s share of what’s paid to the Feds. The issue has little to do with personal income taxes. You deride the “red states” as parasites, but it’s really not as it appears.

          And now add the analysis that went with the Rockefeller report that changes the dynamics of your argument a bit:

          “A state’s balance of payments to the federal government can be affected by whether a state has military bases, defense contractors, or is home to a large population of federal workers, all of which require the federal government to spend money in that state.”

          Kentucky has Ft. Knox, Ft. Campbell, and the Blue Grass Army Depot (supplies). Bet there’s a lot of money that flows through those posts that doesn’t directly benefit the local yokels.

      • RightNYer says:

        This particular line of dishonesty is getting very old.

        Here’s a hint. States don’t get much money, and states don’t pay money. Individuals pay taxes, and individuals receive more transfers. Welfare recipients are much more likely to be blue voters.

        • IdahoPotato says:

          “Welfare recipients are much more likely to be blue voters.”

          Sure. All those folks in WV and KY are Blue voters. And corporate welfare queens that pay no taxes are Blue voters too.

          All those farmers and defense contractors living on the federal dole who I work with are Blue voters … oh wait.

        • IdahoPotato says:

          States don’t get much money. Individuals get Federal funds through subsidies, grants, and write offs. Pretty simple.

          And Red Staters like me who contribute less and whine a lot get a whole lot more. The CARES Act makes it staggeringly clear.

          A person in Idaho with a much lower cost of living gets a lot more than someone in CA or NY. When when it is pointed out, we get our precious feelings hurt.

        • Wisdom Seeker says:

          On top of that, the credit-bubble blue states have been receiving the bulk of the money-printing and are therefore financially inflated across the board (cost of living, housing prices). It’s those inflated costs driving the higher tax payments.

          The red states are more frugal on average, didn’t get financially inflated, keep costs down and therefore have lower salary levels and pay lower tax rates. That’s not necessarily bad! You can make $40K/year in some red states and still have better quality of life than people making $60K/year in some blue cities…

        • Sierra7 says:

          El Katz:
          Kentucky also has Mitch McConnell……

      • Think says:

        Look beyond the headline. Federal spending includes government employees with pensions who retire to the red states. Also social security recipients who retire to Red States. Similarly, since the blue states have run off most productive assets, spending for goods used by the government primarily comes from red states. Finally, most large military bases are in red states.

      • William Ripskull says:

        The Rockefeller Institute… a liberal thinktank and advocacy group. Say no more. That is like Pravda saying that Communism provides more wealth to more people than capitalism… then showing some made up, tailored stats with little context. If blue states are doing so well, why are they all hopelessly in debt and asking for a federal bailout. I don’t think any red states are.

    • Yertrippin says:

      California playing the reverse uno card on states that have been doing it to California forever. Enjoy!

  4. Cas127 says:

    Those single asset CMBS really highlight the advantages/disadvantages of CMBS.

    On the plus side, CMBS allows for huge risk stratification, so if you want Treasuries+.5% for the AAA tranche (invented numbers) or Treasuries+3% for “first bullets in the head” junk equity tranche…you can get it, all sliced from a single asset.

    But…my guess is that when securities like this get pitched, the fact that only a single (highest rated) tranche is in fact the *only* rated tranche somehow goes habitually unmentioned.

    And without ZIRP induced yield hunt madness, nobody would be buying those “first off the gangplank” equity tranches anyway. The spread to Treasuries is simply too tiny to offset the massive “first loss” risks involved.

    • Engin-ear says:

      A great lesson for investors:

      it is not because they can’t evaluate the risk that there is no risk.

  5. MiTurn says:

    “By September 2020, the occupancy rate had plunged to 74% …”

    And these folks leaving have the means to do so. The upwardly mobile are also horizontally mobile.

    Strange times.

    Good stuff, Wolf!

  6. Petunia says:

    If I remember correctly, rent stabilized apts have rents that cannot be cut by the landlords. Those rents are controlled on the way up but they never go down. These buildings will likely stay empty for years.

    I remember a pair of towers they built in the 1970’s on the upper east side they couldn’t rent out for a decade. Eventually, it went to all low income families.

    • Preferential Rent says:

      Incorrect. Google “preferential rent nyc” (which allows owners to offer lower rents if they want)

      Also, it is highly doubtful that 8 Spruce Street is rent stabilized. (It was built after 1974, and its apartments rent for more than $2,000.)

      • Wolf Richter says:

        The building is rent-stabilized because the landlord made a deal with the City so that it could issue the tax-free mortgage bonds (low interest rates). One of the conditions to be able to issue tax-free mortgage bonds is to subject all units in the building to rent-stabilization rules. From the article:

        “The $550-million CMBS includes $346 million of taxable bonds (classes A, B, and C) and $204 million of tax-exempt bonds (classes D, E, and F), according to Fitch. As part of the deal to be able to issue tax-free mortgage bonds, all units are subject to the New York City Rent Stabilization Law.”

        • Rent Stab ques says:

          Thanks for the cx, Wolf. I tried to find the bldg’s rent stab status but was unable to; I appreciate the info. However:

          Question: Is it not that case that, while 8 Spruce is rent stabilized, for a lot of the apartments that law is moot, because an apartment comes out of stabilization when the lease turns over (new tenant) if its rent is more than $2,733?

      • The Knower says:

        Landlords of rent stabilized apartments can offer lower preferential rents, but under the recently enacted rent reforms, they can no longer raise the rent back at renewal. So there is strong incentive not to lower the rent and instead hold out for better days ahead.

  7. Bobber says:

    A high-rise apartment like that is a COVID nightmare. The elevator is a problem, and the stairs are not practical. When you sign a one-year lease, you can get out of that place pretty quickly without a penalty. Why not?

    Plus, you pay premium rent for a tower near the restaurants and night life. Why pay the premium when all the nightlife is shut down.

    Could we see 50% vacancy as one-year leases continue to expire?

    • The Knower says:

      Maybe. I’m a NYC landlord and it is rough out there.

    • Robert says:

      That’s a great point- is it true that only three people are allowed in the elevator at one time? (It will be interesting with the COVID vaccine- perhaps those receiving it will wear dogtags and be allowed in regardless.(Next great underground cottage industry: fake COVID dogtags)

  8. raxadian says:

    [studio at $2,160 a month to a three-bedroom on the 71st floor for $11,229 a month.]

    So… how many people can sleep in the studio?

    • Jon says:

      In San Diego, in a 1 bedroom apartment, which cost ~$1700/month, it’s usually 2-3 persons.
      IN 2 BR apartment, it is always 4 people.
      These are highly paid tech folks I am talking about.

      • qt says:

        Apparently, not highly paid enough!

      • Lisa_Hooker says:

        I recall talking with Dad about the Great Depression. One of the times he mentioned that people and families began “doubling up” in homes/apartments. Gas stations (that was back when many were independent and had mechanics) started closing up and sat vacant.

        • Young Buck says:

          I’ve seen way more people trying to rent rooms out of their home right now than ever before. Im guessing they’re in over their heads and wont be able to make payments much longer unless they get roomates.

    • Kasadour says:

      This bedroom has an oven in it . . .

      –Mitch Hedberg

      • Anthony says:

        and a toilet

      • nodecentrepublicansleft says:


        I went to San Fran in 1992 and stayed with an ex-girlfriend’s brother. They had fashioned both a walk-in closet and a hallway into “bedrooms”. And at that time, good pot costs more per ounce than gold. “I should smoke gold, it’d be cheaper…..”

  9. I’m not a NYC expert, but I’m thinking that rent control is going to be a problem here. Say you have a $3,500 a month apartment that you need to discount to $2,000 to fill it in the current market — you might do it in a normal city, but in NYC with rent control that $2,000 is now your rent (with limited increases) forever. So, if you think rents will come back you’re just going to sit vacant and wait.

    This does not help anyone — especially the bars, restaurants, retail and entertainment near the property. Not to mention that someone probably wants to live there at some price!

    • RightNYer says:

      I’m not an expert, but I don’t believe rent control covers any units you would describe as “newer,” nor does it apply to new tenants. It’s basically only grandfathered people.

      • Petunia says:

        Rent Control in NYC is a term of art. The old rent control were price controls imposed during WWII and never lifted. I grew up in one of those apts. Rent stabilization was the next version imposed in the 1960’s.

        Then there are buildings controlled by NYC Housing Authority, the projects, which are priced based on income. Then there are section 8 properties which are captured once you rent to a section 8 tenant. Then there are Mitchell Lama properties which are rentals and coops reserved for middle income earners, which are rent/price capped.

        The Spruce St. buildings are definitely price controlled and any real NYer would instantly see that because the NY Housing Development Corporation is involved and these are the people who build the projects. Yes, those projects.

        • Wolf Richter says:


          I really appreciate your NYC info. It was a totally bewildering experience when we moved to Manhattan in 2001 and had to deal with the ins-and-outs of the rental market and how it’s structured and how it works and the different concepts of rent control, etc., just to rent an apartment.

    • Kavit Mehra says:

      I work in the NYC rental market. What you said is 100% correct.

    • Lisa_Hooker says:

      The rent stays at $3500, but months with no “r” are free.

  10. dr spock says:

    I wonder if Powell is going to do a Bernanke and do commercially what Bernanke did residentially, ie, buy up all the bad commercial loans from the banks at retail prices, then sell them to hedge funds wholesale. Years ago, farmers use to buy retail and sell wholesale.

    • NewGuy says:

      No. JoeKam will turn this into a public housing project, i.e., a vertical ghetto. The drug lords will live in the penthouses and the meth heads will live in the studios.

      • Clete says:

        “New Jack City” in the early ’90’s had this as a subplot. Except they turned the apartments into crack factories. Pretty good movie, actually.

  11. Memento mori says:

    I expect pandemic to be on its way out by the summer, we will probably reach peak by Jan-Feb then its all downwards from there on with vaccination coming for the public by April. (unless there is mutation)
    We will extend and pretend till next summer, eviction and foreclosure moratoriums will be extended until Sept and some more stimulus will be on the way for the people.
    Life will return to normal by the end of the summer, that is why there are no deals to be made out there, everyone has hit the pause button waiting for the end of the pandemic. They will be proven right.

    • MonkeyBusiness says:

      The pandemic might be “over”, but its legacy will not. This is the first time mRNA based vaccines have been deployed on human beings. Long term effects are guaranteed.

      The companies can’t be sued, you say? Be prepared for true riots.

      • JC says:

        So what, more monkeys will be born to replace the diseased and the machine will live on.

      • California Bob says:

        “Long term effects are guaranteed.”


        • Titan28 says:

          There may be none.

          OTOH, the mRNA vaccine is a self-replicating viral strand that goes into your cells in order to generate a new DNA code that tells intracellular ribosomes to make COV cell surface antigens . This is going to tweak the hell out of your immune system , which has a downside.

          To the best of my (limited) knowledge, this has never been done before. Speaking for myself, I’m not taking it, not until I see how it affects the other monkeys first.

          Monomania. Researchers focused only on one thing may end up ignoring everything else, especially when there is no liability exposure if they screw up.

        • Sea Creature says:


          MRna vaccines like the covid vaccine do not create DNA. That is just hype from the 5G conspiracy crowd. Mrna vaccines make proteins directly (via ribosomes) from translating mRna into amino acid chains (ie proteins).

          mRna therapy platforms (like the covid vaccine) have been around for a while, their processes are well understood.

        • sunny129 says:

          Problems with mRna Vaccines:

          -The mRNA vaccines have not been properly tested to answer essential questions such as: can a vaccinated individual retain enough of the virus to infect an unvaccinated individual?

          -One of the problems is the goal of the Covid vaccine trials wasn’t to determine if the virus was eliminated by the volunteers’ immune system; the goal of the trials was to determine whether the vaccinated individuals became severely ill with Covid or not–with “severely ill” being conveniently left undefined.

          Individuals who’d already had Covid and who took the vaccine were not tested separately for safety and after-effects, so this remains an unknown.

          The unanswered questions about the vaccines’ real-world results will be answered in due time, but not in the lab; they’ll be answered in a public-health “experiment” without precedent.

          If you wanted to design a testing process that was optimized for failure, you’d end up with this haphazard, hurried process careening toward approval. The trials and testing of the Covid vaccines are not equivalent to those applied to previous generations of vaccines.

          The bigger the claims and the harder the sell, the greater the number of red flags raised. If a product works as wonderfully as advertised, it will sell itself. If “consumers” have to be coerced into buying the product, that speaks volumes–whether we’re free to discuss it or not.

          h/t CH Smith (oftwominds)

        • sunny129 says:

          Very few. if at all, candidates 55Y or above have participated (NOT just enlisted) in the trials. Zero data. Full data yet to be published and yet to be peer reviewed by fellow reasearchers!?

          Already elderly and the nursing home residents are targeted first behind front line health workers!
          Disaster waiting to happen!??

          It is minimum 6 months or more for me (MD ret) before even considering to get this vaccine. Many docs I know want to wait for a year.

  12. RightNYer says:

    I was living in New York when this building going up (it was originally called the Beekman building or something). Everyone I spoke to said they wouldn’t live there no matter what the rent was, simply because having to take an elevator 75 stories down every time you wanted to leave the building would be too much of a PITA.

    I suspect, as someone noted above, that it was never even close to fully occupied, at least not without major rent reductions.

    • Wolf Richter says:

      Not everyone lives on the 75th floor. In fact, only a few people live there. I used to live on the 23rd floor (different building, different city, gorgeous views!!) and the elevator rides were well worth it. I also took the stairs when I came back from my running workouts, which was an added bonus. But the Pandemic changed the nature of elevators.

      • RightNYer says:

        Yes, but what’s the point in living in a building like that to live on a low floor? You could live anywhere else and without the premium these types of places command (or at least, used to).

      • yossarian says:

        i’ve been in the building a few times. the elevators are pretty fast considering. the apartments are very nice with floor to ceiling windows and spectacular views. the problem is three-fold: location, location and location. it’s not good. it’s situated between south street seaport and the brooklyn bridge. noisy and crowded during the day and empty at night. it’s been popular with the sort of transient high paid corporate types who move every two years.

    • Fat Chewer. says:

      Yeah, they could have a Seinfeld/Frasier crossover. A sitcom about nothing set entirely within a 75 story elevator ride. I would watch it …if there was nothing else on.

    • Kasadour says:

      i used to live on the fifth floor of an apt building in downtown Portland. The balcony of my apt was level with the tops of a stand of cedars and i had a terrific view of western tanagers and banded pigeons that nested up in them. But with owning two charming little pugs, going up and down constantly to take them out became extremely inconvenient. IMO, living in a high rise like that would get old fast.

  13. Sit23 says:

    Has nobody here heard of rent holidays? $3500 rent per month with every second month holidayed. Valuation stays at property rented at $3500, tenant pays $1750 per month. Everyone happy. Well, nearly everyone.

  14. nick kelly says:

    Sort of off topic, but keerist is that thing UGLY. Those serrations and tiny gappy identical windows are like some kind of dried-out marine carcass on a beach.

    As for the thrill of getting into an elevator to get or leave ‘home’…well, tastes vary.

    • Johnny Ro says:

      Ugly indeed.

      I am physically discomforted and disoriented when I look at any Gehrig building. My sense of balance in the natural world is twisted by his games.

      I must look away quickly.

      • Clete says:

        Johnny: “I believe they call that “Lou Gehry’s Disease.”

      • Fat Chewer. says:

        The fact that some of these buildings sway quite a lot in the wind scares the crap out of me. I trust the engineering, but not the nature of the wind.

        Also, buying millions of those little cans of stainless steel cleaning solution would be quite expensive. There’s your $12,000 rent!

  15. I’m finding all of this fascinating to be honest. It feels like the microwave version of the slow boil that was the 2007 housing bubble popping. I’m in DC and so many people are moving out into the exurbs or really rural communities. What happens when people get called back to work?

    It’s also all about houses houses houses. People are overpaying just to get a house. There are some great deals on condos right now. But this too shall pass.

    • Lance Manly says:

      ” What happens when people get called back to work?”

      The roads will be at a complete standstill. I have not worked in an office for 15 years because traffic is a nightmare. I would love to take the profit on my place, bought as a foreclosure in 2010, but the timing is off by five years and it would too much of a pain.

  16. polistra says:

    Why would anyone want to live within the visual range of this retina-destroying monstrosity, let alone INSIDE it?


    • Apple says:

      If the rent gets cheap enough, I’ll move in!

    • Sir Eduardo R. Dingleberry III says:


    • Wolf Richter says:


      Personally, I think the stainless-steel wrinkle-look is gorgeous, at least from a distance. I’m not sure I’d want to live in it, but it’s awesome to look at.

      • Dan Romig says:

        On the east side of the Mississippi on campus, the U of MN has the Weisman Art Museum. It is a ‘teaching museum’ featuring early twentieth-century artists, such as Georgia O’Keeffe & Madison Hartley.

        It is ‘a striking stainless steel and brick building’ designed by architect Frank Gehry. Built in 1993, the thing looks sort of cool – in a way, but it has two sides to it. From the east bank campus it looks like it ‘belongs’ and it blends in with older buildings. From the west bank, it looks like it’s trying very hard to be the center of attention.

        I like it for the use of stainless steel on the exterior, and I understand that it is, after all, a museum which is all about art and visual presentation. But, from a perspective of ‘form follows function’, it is an exercise in waste.

        The building in Manhattan, to me at least, is a very functional and interesting presentation of a high-rise.

      • R Bacon says:

        Actually, there’s a technical reason for the design. It dissipates wind force.

      • nick kelly says:

        No one can deny it is unusual and striking. As for taste in structures, the Eiffel Tower was considered so ugly by conservative Paris that after its erection for the Exposition of 1889, where it was supposed to be temporary, it was due to be dismantled for scrap. Mr. Eiffel had exhausted all appeals to preserve it, when just in time the French military came to the rescue. Because of its height, then world’s tallest, it was also the best place for a radio antenna, and sent the first radio message from Paris to London.

        While it was on death row, a slick fraudster pretended to be a government agent and insisting on secrecy, ‘sold’ it to a major French scrap metal merchant.

    • lenert says:

      Like the old Parisian who always took his lunch up in the Eiffel Tower so he wouldn’t have to look at it.

    • Petunia says:

      If you had spent years living in south FL where every house and building is the same Mediterranean style, you would appreciate it more. I think the building is cool, but too tall for a livable residential building.

  17. Rcohn says:

    Dollars for the police are likely to be permanently reduced, resulting in longer wait time and more crime.Many companies are now looking upon work from home as a means to reduce overhead , namely leases and not just as a temporary solution.
    NYC , Chicago , Phil, Minn,Portland Ore, Seattle and SF will
    never come back . Buildings will be torn down for more open spaces

    • lenert says:

      “During fiscal year 2019, New York City paid out $175.9 million in civil judgments and claims for police-related lawsuits…

      In 2019, the city’s comptroller’s office dished out almost $4 million in settlements to almost 200 pre-litigation civil rights and police action claims that included excessive force, according to data obtained by ABC News for settlements between 2014 and 2019.”

      Maybe instead of spending ever more money on an ever more militarized and unaccountable police force, we’ll spend more on healthcare, education and jobs so the cops don’t have to show up for a gunfight just because someone is selling lucys on the corner.

      • Anthony A. says:

        I have a better idea for NYC. Why not just use police to ticket vehicles for traffic violations. That way they won’t need a gun and they will be adding to the revenue of the city to fund those “new” jobs. And complaints of robberies or home invasions, etc can be handled buy the mayor’s office with a letter to the affected.

        • Harrold says:

          NYC has meter maids to write parking tickets. They do not carry guns.

          With the advent of radar guns & license plates, there is really no reason to pull over a car to issue a citation.

          That would free up the NYD to focus on actual crime like people selling single cigarettes.

        • Anthony A. says:

          Harrold, thanks for the update. I have not been in NYC for quite a long time. It’s comforting to see that traffic control is handled without those nasty NYPD folks in person.

          Besides the cigarette selling bad guys, maybe they could be used in holiday parade control, US flag raising ceremonies, traffic control for funeral processions, etc. They could team up with the fire department folks on some of this to save tax dollars.

        • MaxG says:

          NYPD (+ MTA + state police) are the only authorities to enforce moving traffic violations. Meter maids enforce parking regulations. Major enforcement change within past 3-5 years is the addition of red light and speeding cameras EVERYWHERE throughout NYC.

  18. Christine Mariani says:

    People are moving out but it’s not the only element that is causing the high vacancy rate in nyc or any other major big city. A lot of people are now remotely going to College and work. Once schools and offices open we will see an influx of people needing to move back into the city. Only then will the rental market rebound.

    And let’s not forget that many people also had apartments they use to Airbnb which they no longer can afford to keep with no tourism.

  19. DawnsEarlyLight says:

    It looks like my beekman goats milk hand-soap, after a few uses in the shower!

  20. Kasadour says:

    . . .this example shows just how fast those apartment towers have been emptying out during the Pandemic.

    In all fairness, the exodus also occurred during ongoing (and largely unresolved) protests/riots where civil disorder left parts of Manhattan wrecked; contributing factors include(d) the derelict of duty by those charged with upholding civil order, ensuring a reasonable sense of security for NYC residents. The expectation of NYC leaders to maintain civil order is not unreasonable- to the extent that black lives certainly do matter, as does civil order, and yet these do not and should not ever have to exist exclusive of one another, so there is no excuse. Who could tolerate living in such circumstances esp when paying those high rents?

    • lenert says:

      It wasn’t reasonable for an NYPD gang to kill Eric Garner in the name of “maintaning order.”

      • Harrold says:

        NYPD work for themselves.

        SCOTUS has ruled that the police have no obligation to protect or serve.

    • Kurtismayfield says:

      Please show me an example of people that live in the neighborhood that this article was discussing felt any effect from the protests. Also crime stats went down at the beginning of the COVID lockdown drastically, so any numbers from the NYPD on crime has nowhere else to go but up

      • Kasadour says:

        you’re joking right? try reading what I wrote a second time and see if your reading comprehension improves some.

        • Steve says:

          I live in Manhattan. We’ve had protests before. Some windows were broken, but there was no civil breakdown. NY residents were never insecure. And NYPD continues to be a problem, unaccountable for their bad behavior. And costing the city a couple hundred million per year to settle their cases.

  21. X-Pat DE says:

    “So maybe Fitch should give its AAAsf rating another look.”
    How often are the ratings agencies bound (by law) to rate companies? If it is once a year, then it doesn’t (currently) react quick enough to the government imposed corona measures and surely then a repeat of 2008/9 is unavoidable.
    Next rating March 2021 suddenly ZZZbx?

  22. David Hall says:

    There are two COVID vaccines about 95% effective. Of the five percent who got COVID infections after vaccination, the infections were less severe. Once they vaccinate nursing home residents and healthcare workers, we may see the death rate dropping. Eventually it will be safe to ride in an elevator or on a jet again.

    • Lee says:

      Kaiser Family Foundation states that of the deaths in the USA from the virus about 100,000 or 40% were in aged care or long term care facilities.

      Some people don’t want that information to be known.

      And a 95% effective vaccine means that in the USA 17.5 million people could still get the virus even if 100% of the population gets it which they won’t.

      • sunny129 says:


        ‘40% of the mortality of C 19 in aged care, nursing, long term care facilities
        ‘Some people don’t want that information to be known’

        This stat is well known online and published more than once in the MSM publications. Only those who have blind faith on these vaccinies, apparently will ignore.

      • Wolf Richter says:


        It’s a tragedy that over 100,000 people in those homes died of Covid. But it’s also an indictment of this mostly for-profit industry. Most of these homes are owned and run by big companies whose shares are traded on stock exchanges – and whose shares are now penny stocks.

        The profit motive and health care, particularly elder care, are always in conflict because to maximize profit, you have to cut costs… hence the Covid fiasco. This became clear in the spring. By May everyone knew it. And NOTHING has changed since then. And now, these people are massively dying of Covid again.

        Every top executive in this industry (CEOs, COOs, CFOs, etc.) that had a Covid death under his or her watch needs to be indicted for negligent manslaughter.

        • Lee says:

          And a lot of those homes are run by cities and states too.

          And even those homes that are privately run are under the oversight of local and state bodies to ensure that those homes do the right thing.

          I don’t understand why the state entities that are responsible for enforcement haven’t done anything.

          Here is an example of a home in Hawai’i that illustrates my points:

          “HONOLULU (AP) — A state-owned health care organization in Hawaii will take over a veterans care home where 26 residents have died of the coronavirus.

          The arrangement announced on Friday will see Hawaii Health Systems Corporation take over as the operators of Yukio Okutsu State Veterans Home in Hilo. The previous operator, Utah-based Avalon Health Care, will relinquish all control over the facility.

          Avalon experienced additional outbreaks in June and August at its Hale Nani Rehabilitation and Nursing Center facility on Oahu, where 42 residents and 40 workers tested positive for the coronavirus. Five residents died of the disease.

          The veterans home has had a history of falling short on health standards. The Centers for Medicare and Medicaid Services gave the home a health inspection rating of one star out of five.”

          So the state knew the home was substandard, why didn’t they do anything about it?

          I’ve posted before that the results of the screwed up hotel quarantine here in Victoria resulted in the release of the virus into the community.

          About 75% of the deaths in Victoria were in those types of facilities and concentrated mainly in the northern and western parts of the city.

          Our suburb had zero deaths in LTC facilties, 60 or so cases of the virus in total, and less than a dozen cases in LTC facilties.

          When one looks at those numbers one wonders why all those other places screwed up so badly…………….

    • sunny129 says:


      See my comments re credibility and reliability of the vaccine. above.

      No data on the effects vaccine on the elderly (55Y or above) Full data yet to be released. No peer review so far. Just the word of the companies!?

      • Lee says:


        It will probably be, as you have suggested, the biggest experiment on humans in the history of medicine.

        Want to be a guinea pig?

        Get one of the vaccines.

        I’ll wait for a year or so and see what happens………………

        And even here in Victoria where we haven’t had a case for about a month and only one death, the government is still finding virus strands in sewage which means that the virus is still out in the community…………..

        it just hasn’t been found in a person with it or hasn’t been tested and picked up.

  23. Lou Mannheim says:

    Hi Wolf – is it possible to obtain CMBS and RMBS data at the city level? I am curious how much is O/S just in Manhattan – I would think it’s easily in the hundreds of billions. What’s the current haircut the market is taking, if any?

    • Wolf Richter says:

      Except for single-asset CMBS, such as this one here, all CMBS/RMBS are diversified and have mortgages from all over the place in them. This is particularly the case with RMBS because they have thousands of mortgages in them. The idea is that investors are not exposed to the fate of just one city.

  24. ED Kennedy says:

    The real secret data;
    How many of the vacant apartments are still under lease with the rent still being paid?
    When do those paying vacant leases expire?

    That may explain some of the difference between the number of vacant apartments, and the number available to lease.

    • Wolf Richter says:

      “Vacant” = no tenant, no rent, no cash flow. It does not mean the tenant is on vacation and is still paying rent.

      • Wisdom Seeker says:

        The building may be far less than 75% full in terms of human beings. The CMBS holders will care about cash flows but there’s more to physical occupancy than just rent payments.

        There may be a fair number of tenants whose rent is still current (or “current enough not to count as vacant”) but who aren’t in the building. Many have felt the need to decamp to COVID-friendlier environments, but have been reluctant to give up their spot in the city.

        I’m thinking of the San Fran folks Wolf has mentioned who have been buying up 2nd properties in Carmel etc. Also know a few people who have spent a lot more time at their “vacation” place without giving up their original “main” place. And sometimes the kids decamp with one parent while another stays to work. Tons of potential scenarios.

        • Wolf Richter says:

          Wisdom Seeker,

          Oh, that empty building syndrome … that’s a bigger deal with condo towers. In some of these buildings, every single condo has been sold, but hardly anyone lives there. They’re investment properties, and have been marketed that way, often to overseas investors who may never have been in the condo. It seems part of the flood of condos now on the market in San Francisco are those investment properties.

  25. CreditGB says:

    Office commute? No longer need to consider
    Entertainment? No longer open, many will be permanently closed.
    Security: Police being defunded by morons in city government.
    Rent: Based on the above being positives, but have turned negative.
    The renters have the next move in this game. It is happening in all cities similarly situated.

    • Yertrippin says:

      “Security: Police being defunded by morons in city government.”

      Still haven’t realized they are not there to protect you? Public servants with zero accountability are a complete waste of resources and should have their budgets adjusted accordingly . Blue flu dereliction shouldn’t be rewarded.

  26. Walter Ego says:

    It’s temporary people relax. The reason why the vacancy so high is because the landlord knows that’ll be a snap back demand for this sort of luxe product in 6 to 9 months. Brookefield has deep pockets I’m sure they’re not worried. People left for health and safety concerns. When those health and safety concerns subside with a vaccine people will return. Get it?

    I honestly think that Elmer Fudd gets a twisted perverse pleasure in reporting on all the pain experienced by successful landlords. It’s as if he wanted to be one but never could.

    Hey Elmer, are hotels dead forever too?

  27. Beardawg says:

    75% occupancy in an apartment complex creating a jingle mail situation seems ludicrous. Hotels can break even at something like 50% occupancy. They have been operating 10 years and they will jingle mail? Where are the operating reserves?

    • Petunia says:

      This project, looks to me, like a backdoor attempt at mixed income housing. Mixed income housing has never worked in NYC but they keep trying to implement it.

      City officials don’t want to accept the fact that people with jobs cannot live next door to people with feral lifestyles. Having neighbors who blast music and come and go all day and night, is not conducive to holding down a job, regardless of how close to it you live.

      These projects are always govt backed because any experienced landlord knows better. The govt doesn’t need a reserve fund because everything is taxpayer backed and the taxpayers can afford it.

      • Lisa_Hooker says:

        So true. The feral lifestyle on Wall Street spends most of its life away from home. “Ne merde pas où tu dors.”

  28. Mad Dog says:

    De Blasio will get the building filled up by turning it into a housing complex for the homeless.

  29. Gerry says:

    Recent reviews at Yelp of this apartment house feature lengthy one-star reviews by renters complaining about month-long waits for elevator repairs, skels in the building public park, feces covered outside walkway and urine smells in public areas. Reviewers warn that: the Haier appliances in cheaper apartements are crummy; that in 2019 the new management cut costs by hiring new staff; and that getting back most of your security deposit when you move is near impossible. The novel coronavirus seems to have been the final straw for many renters who were already planning to bail out of this Gehry building with a glitzy facade and feet of clay.

  30. John says:

    Impressive info Wolf. So just interest payments on the mortgage till 2024? Sounds like Brookfield is a hedge fund. They must do something with the money they collect. Also the the New York Housing Authority is involved with this mortgage is interesting. Read something in the financial times today by Martin Wolf in an editorial about governments are not like households when it comes to a budget, as long as they can print their own money.

  31. Mad Dog says:

    I heard De Blasio is also considering taking all the prisoners that he let out of prison and putting them in there. I wonder what that will do with the property values.

  32. Mad Dog says:

    We had to appraise a Condo on DC near the Waterfront. A nice area. The realtor took us into the lobby where a bulletin board listed all the names of the owners who were in default of their Condo fees. It was a mile long. Who in their right mind would buy in a Condo complex where half the owners were in default. If we didn’t go by that bulletin board, we would have never known. I’m sure the corrupt realtor never told any of the buyers of this fact.

    Who was it that said ” A sucker was born every day”

    • Sierra7 says:

      Mad Dog:
      “Who was it that said ” A sucker was born every day””?
      Adam Smith (sarc)

  33. Sam says:

    Phineas Taylor Barnum (1810-1891) may never have said “There’s a sucker born every minute.” If he did, he may have said it two or four years after Mark Twain’s friend Artemus Ward did.

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