Office Landlords Pushed to Make Tough Decisions as a Hybrid Work Scenario Continues

At a time when some landlords begin to review their portfolios, the reality has set in of the need to make tough decisions about properties generating returns that no longer make economic sense in the post-pandemic era of remote work and rising interest rates. Cited in example was RXR Realty which is considering residential conversions of two properties, one of which is the high vacancy landmarked prewar office building at 61 Broadway in Lower Manhattan. Through what the developer has called “Project Kodak,” a set of metrics drawn up by the firm’s team are being used to rank RXR’s office holdings accordingly. Further investments in buildings that are “deemed obsolete ‘film’ buildings will no longer be made, with a willingness to hand back the keys to the bank if loans cannot be restructured for high vacancy properties, with focus shifting instead to “those properties that are up-to-date ‘digital’ buildings that can continue to attract office tenants.”