Hell’s Kitchen’s iconic Worldwide Plaza office faces an uncertain future as key tenants Cravath, Swaine & Moore and Nomura Holdings plan exits. Last week, ratings agency Fitch downgraded the building’s loan, raising questions about the skyscraper’s future as an office block.
With its pyramid top, gray-purple granite face and sprawling two-million-square-foot interior, New York City’s Worldwide Plaza is a landmark above the Hell’s Kitchen skyline.
The 50-story office skyscraper and its two smaller residential towers were created by David Childs (the pyramids are called “David’s Diamonds’) of the renowned architectural firm Skidmore, Owings and Merrill. Now this iconic giant is facing a crisis as key tenants prepare for an exodus, casting a shadow of uncertainty over its financial stability.
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Long before Cravath, Swaine & Moore and Ogilvy and Mather moved in as anchor tenants, the site was a parking lot and, before that, the third Madison Square Garden. It was on this historic site that Marilyn Monroe sang Happy Birthday, Mr. President to President John F Kennedy in 1962. When Cravath chose 8th Avenue in the late 1980s, a move from the solid precincts of Wall Street to a street infamous for pornographic cinemas and the Port Authority Bus Terminal, it signaled more than just a change of address; it signaled a transformation.
Last week, Fitch, the financial ratings agency, downgraded the loan secured by the 2 million square foot office building, labeling it a “Loan of Concern” due to imminent rollovers. The Worldwide Plaza loan downgrading was first reported by Crain’s.
Fitch said that Cravath, Swaine & Moore, one of the original tenants that contributed to the building’s prestige, would leave their 617,000-square-foot space for Hudson Yards by 2024. Furthermore, Japanese investment bank Nomura Holdings, which has a lease expiring on its 16 floors in 2033 but an option to exit as early as 2027, is also exploring options to downsize its workspace.
Losing two tenants, that generate between them over 80% of the cash rent in the building, within a short period will leave a nearly vacant property and a huge hole in Worldwide Plaza’s finances. When New York REIT tried to sell the entire office tower for $1.7 billion in 2017, they attracted disappointing bids and ended up selling a 48.7% stake to RXR Realty and SL Green Realty Trust. Today, with Nomura and Cravath preparing for exit, the value of the tower and its loans are being closely watched.
RXR, SL Green and New York REIT Liquidating LLC did not immediately respond to a request for comment.
New York businesses have been downsizing their physical offices since the pandemic, fuelled by the rise of remote work and the need for operational efficiency. This week, Commercial Observer reported that demand for office space in Manhattan had continued its downward slide in the third quarter of 2023, but the office vacancy rate dropped for the first time in nearly two years.
Amid this tumult, a sliver of hope could come from City Hall. Mayor Eric Adams recently outlined a proposal to convert existing office spaces into as many as 20,000 homes, aiming to alleviate New York’s perpetual housing crisis — a pivot being demonstrated at the McGraw-Hill Building on W42nd Street. However, the initial area for the Midtown South Neighborhood Action Plan does not go as far north as Worldwide Plaza.
What’s the issue?
Just convert it to another “migrant” center for all of the “migrants” flooding across the non-existent southern border while we defund the police, release the criminals without penalty, allow the mentally ill to wander the streets, let our children get swallowed up by drugs while our grandparents can’t afford necessary medicine and eat dog food.
Yeah, let’s do that.
This thoughtful analysis has been brought to you by Fox News and the NY Post.
It’s literally what is happening un nyc unless you are living under a rock
Not accurate, and not what this article is about. A bunch of right-wing talking points with no relation to the topic being discussed – quintessential Fox News tactics
^^^^^^ this
Exactly what I was thinking. Thoughtful analysis.
Spot on! I wouldn’t put it past some of the city’s council members to propose exactly that!
Where did your family migrate from? Or are you native american?
What percentage of Native American are you? Tell your grandparents and great-grandparents to gtfo of America then.
Migrant center….uh uh, migrants occupying worldwide park….no thanks
A lot of misplaced vitriol against migrants! Why? In my day the often heard: What part of the boat did your people come over on?, needs to be revived. Not only that, a lot of these people walked (some w/children cross the Darien Gap) for opportunities for their families- which might be a “foreign” concept to some. If you have a problem with the policy a community forum with an article about building financing is not a good place to air grievances about a southern border… where most people have never set foot. Scream at your television… so the fear, anxiety, and doomsday loop doesn’t leave your own home. Meanwhile, it’s a sunny day… and I’ll be out in the plaza this afternoon!
Immigration aside for the moment, it certainly would be an interesting demonstration project for a unique co-living space demonstrator without needing structural modification. Put the shared communal kitchens / open space on the glass exteriors and the bedroom private spaces in the core with no windows. Give it a shot on a couple floors, see how it flies. I’d rent it and it sure would help with our market pressure…. And as well our neighborhood businesses – weed shops out, real retailers in.
Convert it to housing. Does anyone else feel this tower represents the same hubris as the Tower of Babel?
PS we don’t need anymore phonies in office. We should of elected Curtis at least he loves HK and would of been tough on crime. Stop voting by color and start picking the right men or women who worry about their voters.