Appraiser cuts Meatpacking District store’s valuation to the bone
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.
