Building debt makes its way onto tenant checklists

New York /
Feb.February 15, 2010 02:02 PM

As plunging rents and empty office and retail space continue to threaten the city’s commercial landlords, prospective tenants are increasingly looking at a building’s financial health before committing to a lease. “Maybe four or five years ago, there were only one or two landlords you’d have to watch out for,” says Ted Rotante, a senior managing director at FirstService Williams. “Now there’s maybe 10.” Even if a financially-strapped landlord doesn’t actually default, the strain often becomes obvious in the form of run-down lobbies and stringy heating or air-conditioning. Some commercial brokerages are developing ways to assess the likelihood of these kinds of situations. CresaPartners, for example, uses databases like Trepp’s CMBS Deal Library to analyze a building’s debt. In one recent transaction, the brokerage looked at an undisclosed Class A Midtown office tower and advised its client to go elsewhere when it found that the owner would have needed $50 per square foot, or $10 above the market rate, in order to cover its debt service and operating costs.


Related Articles

arrow_forward_ios
From left: Robert Mercer with 48-05 Metropolitan Avenue and Gary Barnett with 17 West 60th Street (Getty, Google Maps, Bulado General Contractors Corp)
$730M loan bundle funds slew of NYC projects
$730M loan bundle funds slew of NYC projects
Cerberus nabs $616M CMBS loan on FirstKey single-family rentals
Cerberus nabs $616M CMBS loan on FirstKey single-family rentals
Cerberus nabs $616M CMBS loan on FirstKey single-family rentals
55 East 52nd Street and Kenneth Fisher (Court Square, Fisher Brothers)
What the financial titans pay at Fisher Brothers’ Park Avenue Plaza
What the financial titans pay at Fisher Brothers’ Park Avenue Plaza
The Shoppes at Buckland Hills in Connecticut (Google Maps, iStock)
CMBS delinquencies plunge, but still above pre-pandemic levels
CMBS delinquencies plunge, but still above pre-pandemic levels
Here’s what tenants pay at Vornado, Trump’s 1290 Sixth Avenue
Here’s what tenants pay at Vornado, Trump’s 1290 Sixth Avenue
Here’s what tenants pay at Vornado, Trump’s 1290 Sixth Avenue
Blackstone secures $1.1B refi on Sun Belt multifamily portfolio
Blackstone secures $1.1B refi on Sun Belt multifamily portfolio
Blackstone secures $1.1B refi on Sun Belt multifamily portfolio
Bet against retail costs investor big-time
Bet against retail costs investor big-time
Bet against retail costs investor big-time
Top loans: Related Companies exits Margaritaville, digs in at Truffles Tribeca
Top loans: Related exits Margaritaville, digs in at Truffles Tribeca
Top loans: Related exits Margaritaville, digs in at Truffles Tribeca
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...