Little did the laborers working on the original 14-building Rockefeller Center complex know in 1931 that their small gesture would result in a tradition that attracts nearly 700,000 daily visitors during the holiday season. When these workers pooled their money together to purchase a modest 18-foot-tall balsam fir and planted it in the middle of a muddy construction site, later decorating the tree with homemade garlands and tin cans, their intention was to boost morale amidst tough labor conditions during the throes of the Great Depression. Two years later, the first official Rockefeller Center Christmas tree was lit followed by the opening of the skating rink in 1936.
Now, 94 years after that first tree symbolically established a tradition of hope, a different set of challenges faces one of New York City’s most valuable parcels of real estate. Despite more than 100 million visitors each holiday season and countless more throughout the year, the Center had been
struggling to manage some of the debt incurred by an expansive reimagining that ownership undertook in recent years. Coinciding with the pandemic, an increase in office vacancies along with a reduction in tourism hit Rockefeller Center and set the stage for a bellwether for the direction of Midtown commercial real estate. The ownership group was recently approved for a massive 3.5-billion-dollar SASB (Single Asset Single Borrower) loan. This CMBS (Commercial Mortgage-Backed Security) loan is the largest ever for a single office asset. To many, this move is a litmus test for the resiliency of the post-pandemic NYC office market.
Of course, this isn’t just any asset. Rockefeller Center is comprised of 13 buildings totaling 7.3 million square feet, sitting on some of the most valuable real estate on the planet. Owned and operated by Tishman Speyer, the campus is made up of an ever-evolving collection of retail, world class dining, attractions, event spaces, workspaces and open spaces. This creates a unique asset that is not wholly dependent on one commercial arena. While midtown office vacancies sat near 20% in mid-2024, Rockefeller center was at 93% occupancy thanks largely to the attractive versatility and unique amenities that set it apart from most of the competition. However, there were still appreciable risk considerations with a loan of this size. If a single-borrower loan such as this one does not work out, the lender is exposed to potentially recovering only pennies on the dollar. This was the case in 2022 at nearby 1740 Broadway where Blackstone ultimately defaulted on a 308-million-dollar loan, leaving investors with a return of .74 cents on the dollar after the building sold for half its prior value. However, 1740 Broadway was largely a single-tenant asset; a risk not shared by the dynamic campus ecosystem at Rockefeller Center. More importantly, for the overall health of the Midtown commercial sector, this Rockefeller refinancing and the faith of the lenders, BOA and Wells Fargo, offers substantive hope that there will be renewed confidence in the neighboring real estate market that could influence other high-profile assets.
The 2024 tree was donated by a Massachusetts man, Earl Albert in honor of his late wife Leslie. The majestic 75-foot Norway Spruce will be seen by millions as a beacon of hope and inspiration amidst a holiday wonderland in this “city within a city”, standing tall before the iconic backdrop of Rockefeller Center. Despite post-pandemic struggles, the massive crowds and nearly fully occupied available spaces indicate a return to normalcy. For many in the world of midtown real estate, there is hope that the resiliency and success of Rockefeller Center is indicative of a broader future recovery for the surrounding area.
