Cooper Union wins feud with Aby Rosen over Chrysler Building — landmark’s future remains in limbo

 Cooper Union won its battle with Aby Rosen last week when Manhattan Supreme Court Judge Jennifer Schecter booted Rosen from the Chrysler Building’s leasehold.

But short of an unlikely legal reversal, the distinguished educational institution is now on its own in bringing the beloved but troubled skyscraper into the 21st Century.

The big question is how to do that. The school and its real estate advisor, Savills, are studying numerous options.

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Cooper Union won its battle over Chrysler Building’s leasehold against developer Aby Rosen.De Agostini via Getty Images

“I think we can all agree that operating a  Chrysler Building is not the school’s forte,” said Savills Capital Markets Group senior managing director David Heller.

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“We are evaluating the alternatives” for the future of the  landmark, he said. “We understand there’s going to have to be significant capital investment.”

Rosen’s RFR held the leasehold since 2019 when it succeeded Tishman Speyer. Cooper Union moved to oust Rosen over his failure to pay $21 million in ground rent.

Rosen counter-sued, blaming the school for “mismanaging” the property, but Schecter rejected his arguments.

Rosen theoretically  could appeal.

“We’ve had no indication yet” of that happening, said Cooper Union’s lawyer Gabriel Herrmann of Gibson Dunn.

Rosen’s representative said he had no comment.

Whatever Rosen’s failings might have been, he’s an experienced real estate developer with the know-how needed to restore and update a classic property — as he did with the Seagram Building.

Without him, Chrysler’s problems remain to be addressed.

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Aby Rosen was booted over his failure to pay $21 million in ground rent.Paul Bruinooge/Patrick McMullan via Getty Images

They include office floors that are 40% vacant despite its location in the red-hot Grand Central area, awkward floor layouts, and badly aged infrastructure and interior design that don’t cut it for today’s tenants.

The woes include limited sunlight, poor cell phone reception, balky elevators and overall decay in the magnificent Art Deco lobby.

Finding a different real estate developer to take over the leasehold won’t be easy. The annual ground rent rose from just  $7.75 million in 2018 to $31.5 million this year, and will increase to $41 million in 2028 — numbers that Rosen told the New York Times were “not sustainable or economically feasible.”

Rosen had invested $170 million in physical improvements, but it wasn’t enough to stem a pandemic-years exodus. Creative Artists Agency is the only current marquee-name tenant.

Although Cushman & Wakefield is managing and leasing the building day-to-day, Savills has the long-term role.

“We’re making sure we evaluate all alternatives, whether they’re structural, to bring in a partner, to bring maximum risk-adjusted value to the school. We’re making sure everyone understands the options,” Heller said.

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Cooper Union will seek a different real estate developer to take over the leasehold — but it won’t be easy.Helayne Seidman

“As you’d expect, we’ve had a significant amount of interest from potential partners. It’s a great landmark in the best market in the city. But we  haven’t engaged in conversations” with any of them.

One strategy could include seeking historic-property tax credits from the federal and state governments, as were used to help pay for the Moynihan Station project.

“Maybe they’re not available but it’s part of our due diligence,” Heller said.

Once the building is repositioned, rents might run from the $80s per square foot in lower floors to “north of $150 at the top,” Heller added, but “we’d  struggle to get those now.”

https://nypost.com/2025/02/02/business/cooper-union-wins-feud-with-aby-rosen-over-chrysler-building-but-landmarks-future-remains-in-limbo/

Does assessor appreciate true horrors of downtown Chicago’s commercial real estate market?

 Chicago is known globally for its striking skyline. But now many of the impressive towers that make up that awe-inspiring cityscape are going for a song. Is the property-value carnage happening regularly downtown registering appropriately with Cook County Assessor Fritz Kaegi?

Case in point: The 57-story tower at 70 W. Madison St. sold earlier this month for $85 million, CoStar News reported. That sounds like a lot, but in 2014 the sellers paid $375 million — more than four times what they just got.

Kaegi’s office late last year reassessed 70 W. Madison for property-tax purposes. The office came up with a value of $317 million, a 27% increase from the $250 million valuation determined in 2023 by the Cook County Board of Review, which hears property owners’ appeals of the assessor’s work.

What did the market just say the Skidmore, Owings & Merrill-designed tower was worth? $85 million. The Board of Review presumably will take that sale into account when it considers the likely appeal later this year.

Granted, this is just one building where the assessment and a fast, subsequent sale are at such sharp odds. But the shocking bath the owners of 70 W. Madison took is hardly an anomaly.

The former Groupon headquarters at 600 W. Chicago Ave., a 1.6 million-square-foot structure running along the North Branch of the Chicago River, sold in recent days for $89 million. Just eight years ago, Chicago development firm Sterling Bay paid $510 million for the hulking structure. The primary reason for the lost value? Financially ailing Groupon, which had occupied 300,000 square feet there, decamped about a year ago for a 25,000-square-foot space in the Loop.

And a deal is close to sell 311 S. Wacker Drive, a high-end office building adjacent to the Willis Tower that many recognize by its illuminated crown at the top, for around $70 million, according to Crain’s Chicago Business. The owners paid $302 million in 2014, and the potential buyers even have discussed razing the tower and building something new in its place.

All of the above is context for the news that Kaegi’s office has completed its triennial reassessment of Chicago properties and found that, despite robustly higher values for homes in the city over the past three years, values for commercial properties as a group have risen even more. After Kaegi’s reassessment, commercial properties would account for 51% of the city’s tax base and residential for 49%, the Tribune reported. Currently, Chicago homeowners collectively shoulder 51% of property taxes and commercial 49%.

The percentages matter a lot. Even if government property tax levies stay level (which they haven’t; take a look at ever-rising levies from Chicago Public Schools, which make up well over a half of Chicago property tax bills), a change in how they’re apportioned means significantly higher tax bills for homeowners or commercial property owners. As of now, businesses are set to pay more because governments are due the taxes they demand regardless of who pays what, and businesses’ share of the burden will increase by the assessor’s accounting. But the assessor’s work is far from the last word on the matter.

The three-member Board of Review, which will consider what we’re sure will be a pile of appeals, has seen fit to dramatically reduce the assessor’s commercial property assessments in other parts of Cook County, resulting in shockingly higher property tax bills for many suburban homeowners. Kaegi has harshly criticized the board for the financial pain those homeowners are suffering, in particular singling out for his ire Commissioner Larry Rogers Jr., who represents the South and West sides and the south suburbs. Rogers has responded in kind and told us last year he may run against Kaegi for assessor in 2026.

We’ve spoken positively in the past about Kaegi’s efforts to modernize his office after the disastrous tenure of Joe Berrios. And we appreciate that the nepotism and other questionable practices associated with the Berrios years aren’t an issue now.

But large portions of the business community are irate at what they perceive as Kaegi’s exorbitant valuations of their property, which in their view he’s doing in order to lighten the load on residents. After all, businesses don’t vote; people do.

At least on the face of it, there’s reason to wonder at the conclusions Kaegi’s office has drawn in the wake of what all agree has been a painful post-pandemic hit to commercial values, particularly office. Downtown office buildings make up 20% of Chicago’s tax base.

The assessor found that the value of Chicago’s commercial subcategory comprising office, retail and hotels rose 22% since the last assessment. In the three townships making up the Loop, the increase totaled 21%, according to Crain’s.

That’s head-scratching in light of the parade of historically massive losses downtown office building owners have absorbed in recent transactions.

Kaegi’s office is categorizing some of the worst blows taken by Chicago office building owners as “distressed” sales that don’t always reflect what the assessor views as true value. Many landlords, we’re confident, aren’t buying that reasoning.

We won’t be surprised if Kaegi’s numbers change radically after the Board of Review is finished. First-installment property tax bills due this coming spring just were mailed out, but they don’t reflect the latest reassessments. The second-installment bills, due in the fall, will account for the changes in Chicago. For homeowners, the results could well be ugly, as we’ve said before.

The bottom line is that this war between the assessor and the Board of Review is serving no one’s interests. At the end of the day, the job of those who assess property for tax purposes is to get the calculations as correct as possible in light of what’s actually happening in the market. It’s not to try to redress the inequities of a municipal tax system that relies far too heavily on landowners.

Those fights are for the likes of Mayor Brandon Johnson, Gov. JB Pritzker and an independent Chicago School Board that will take full control of Chicago Public Schools in 2027.

https://www.yahoo.com/news/editorial-does-assessor-fritz-kaegi-110500152.html

Move over, Austin: Denver rents are falling at one of the fastest rates in the country

 It’s a good time to be a renter in Denver.

Throughout the city and its suburbs, rents are falling and newly constructed buildings are dangling an array of incentives for signing new leases: offers of six, eight, or even 10 weeks free are now common, brokers say, as are other perks like discounted parking and gift cards.

The relief comes after a construction boom added tens of thousands of new units to the metro area last year alone, largely in its urban core. Builders rushed to Denver to meet demand from a population boom before and during the pandemic and are now completing them as growth has slowed.

“Everybody that wanted to move here because of remote work has moved here,” said Brian Sanchez, chief executive officer of Denver Apartment Finders, a locator service. “The demand is not keeping up with the supply.”

Between 2010 and 2020, the Denver region grew by more than 16% to nearly 3 million people. Since 2020, its growth has slowed to about 1% annually.

Rents for apartments of up to two bedrooms in the Denver metro area dropped 5.9% last year, according to Realtor.com. That’s a faster decrease than several other onetime hotspots for pandemic-era migration and construction, like Austin and Nashville. There, rents fell 5% and 4.4%, respectively in 2024.

'Trying to keep people in buildings'

As rental competition heats up, even Denver’s renewing renters are often able to lock in incentives like a month of free rent, once a rarity.

Broker Colin Stok said he recently showed a friend new apartment options, including one offering 10 weeks of free rent and free parking. When the friend’s current rental company found out he was looking, it agreed to match the incentives in exchange for a lease renewal.

“They’re trying to keep people in buildings,” said Stok, the Denver team lead at real estate company Cross Street. “If I was a renter right now, I would be out there.”Despite the incentives, the Denver area still isn’t a cheap place to live. The median apartment rents for around $1,800 a month. But Sanchez, of Denver Apartment Finders, is encouraged by what he’s seeing — between the falling rents and incentives, he’s been able to help middle-income workers like teachers land units in new, amenity-filled buildings.

DiAnthony Sweet, 40, had plenty of apartments to choose from when he accepted an aerospace job in the city and began planning his relocation from the Tampa, Fla., area. Researching the area remotely before beginning his hunt, he ended up creating a spreadsheet of more than 20 possible options.

“Seeing all the new construction and all of the new apartments, it was just so overwhelming,” Sweet said.

Construction site at 10th and Broadway in Denver on Sept. 19, 2024. (Photo by Hyoung Chang/The Denver Post) · Hyoung Chang via Getty Images

After arriving in Denver to search, he fell in love with the first apartment he saw, a one-bedroom in a new building in the trendy River North Arts District. He received 10 weeks of free rent on a 15-month lease, and as an added bonus, his building will allow him to upgrade to a larger unit when his wife and daughter join him at the end of the school year.

“I had planned on seeing more, but the first one checked all the boxes,” Sweet said. He’s looking forward to having a short commute to his office and exploring the area’s lively music, restaurant, and arts scene.

A different story for buyers

While renters have been scoring deals, prospective buyers in Denver haven’t enjoyed the same luck. Although inventory levels have improved, prices — especially for single-family homes — remain near all-time highs.

As of September, the median home in the region sold for nearly $500,000.

High mortgage rates, insurance costs, and election-related anxiety helped keep sales sluggish across the metro area in 2024, said Realtor Stacie Duffy, who works in the southern suburb of Greenwood Village. She thinks there’s some pent-up demand that may help the market pick up this spring, but said many first-time homebuyers are still stretched by the prices.

“The affordability is a big problem,” Duffy said. “Some places are easily 20% to 30% more to purchase than it would be to rent an equitable property. That’s a hard pill for people to swallow.”

https://finance.yahoo.com/news/move-over-austin-denver-rents-are-falling-at-one-of-the-fastest-rates-in-the-country-131643629.html

Data Center Euphoria Starts to Ebb After DeepSeek

 

• Some landlords and credit providers are starting to fret
• Wider credit markets are comparatively sanguine so far

The market turmoil sparked by DeepSeek’s chatbot this past week has left some rethinking the credit frenzy around artificial intelligence.

Corporate giants told money managers this week that the Chinese startup’s cheaper models will only spur more demand for the technology and the sprawling infrastructure it requires. While big investors such as Blackstone Inc. President Jon Gray say that “digital infrastructure remains essential,” behind the scenes landlords and credit providers say the situation is more nuanced, and some are starting to fret.

https://www.bloomberg.com/news/articles/2025-02-01/silicon-valley-is-undaunted-by-deepseek-bankers-funding-ai-data-centers-aren-t