Jeff Sutton’s Soho retail rental was simply dealt a staggering valuation hit.
The retail portion of 599 Broadway was reappraised at $32 million, based on Morningstar Credit score. That’s an 80 % decline from the property’s 2018 valuation of $150 million.
The sharp drop comes because the property faces mounting misery. A trustee representing CMBS bondholders sued Tuesday to foreclose on the mortgage, alleging the landlords stopped making debt funds in January.
The debt traces again to a $75 million business mortgage-backed securities mortgage tied to the retail rental spanning the basement and first three flooring of the 12-story constructing. The mortgage, held by constructing proprietor David Topping and two companions, transferred to particular servicing in January. Topping didn’t instantly reply to a request for remark.
Including to the stress, an entity tied to Sutton’s Wharton Properties stopped making lease funds late final yr, based on Morningstar. Sutton controls the decrease ranges of the constructing by way of a 49-year lease signed in 2008 with constructing proprietor David Topping in a deal reported to be valued at almost $500 million.
The property additionally misplaced its anchor tenant final yr. In December 2009, Sutton inked a $120 million lease for the majority of the constructing’s 42,000 sq. ft of retail house with American Eagle. However the retailer vacated its 30,000-square-foot house in July 2025 when its 15-year sublease expired.
Sutton has proposed a modification that’s being evaluated by a particular servicer, based on Morningstar. He didn’t instantly reply to a request for remark.
The retail house, on the northern fringe of Soho, may forge a path to restoration as retail momentum steadily rebuilds. Whereas financial uncertainty saved some retailers on the sidelines within the first half of 2025, many returned to the market within the second half of the yr, based on a retail report by the Actual Property Board of New York.
Competitors for high quality house in Soho is as intense as ever, with solely a handful of storefronts obtainable and median asking rents alongside the Broadway hall reaching $750 per sq. foot, 12 % beneath the all-time peak of $850 in 2017, per REBNY.
Issues rotated for the office portion of the constructing, as soon as anchored by WeWork. After its $20 million mortgage was watchlisted in 2024, the property traded in 2025 for $21.7 million, fetching greater than the excellent mortgage stability and avoiding losses for bondholders, based on Morningstar.
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