Vornado, Related's Google-Anchored NYC Tower Nears Default
A fully-leased, credit-tenant office tower is headed toward default anyway, and that tells sponsors where the real risk sits.
The $396 million CMBS loan behind 85 Tenth Avenue, the Chelsea office tower where Google leases 300,000 square feet, moved into special servicing this week on an “imminent default” designation, according to servicer commentary. The building is 89.9% leased.
Why it matters
This is not a leasing story. 85 Tenth Avenue carries a marquee sponsor group, Vornado Realty Trust and Related Companies, and its largest tenant is Google, which renewed its lease in 2024. If a nearly fully-occupied, credit-tenant-anchored asset with that ownership behind it can land in special servicing, the failure point is the debt stack and the rate reset, not the rent roll. For sponsors underwriting refinance risk on offices that termed out debt in 2016 through 2019, that is the signal to watch across the national capital markets picture: occupancy no longer clears a loan through maturity on its own.
The numbers
The property was refinanced in 2016 with a $625 million package from Deutsche Bank at a 4.55% weighted average rate. The current mortgage balance stands at $396 million, with an additional $229 million in mezzanine debt on top. That senior loan sits in the DBWF 2016-85T CMBS trust, part of the larger CD 2017-CD3 and BACM 2017-BNK3 conduits. The loan matures in December 2026. Related bought the 635,000-square-foot, 11-story building in 2007 for $430 million; Vornado took its stake as part of the 2016 refinancing. The property’s 2025 cash flow ran 28% below what the 2016 underwriting projected.
What’s next
The loan’s transfer to special servicing, ahead of its December 2026 maturity, sets up a workout: an extension, a modification, or a sale of the note. Watch whether Vornado and Related inject fresh equity to push through a rate-reset extension or let the special servicer run the process, and whether other 2016-vintage office loans backed by credit tenants follow the same path into servicing well before their stated maturity dates.