Earlier this month, New York City-based RCA released its "Troubled Assets Radar" report for the New York Metro area. The firm found New York City and its surrounding suburbs were home to 189 troubled assets valued at nearly $9.2 billion. RCA defines a troubled property as one that is in foreclosure, bankruptcy or undergoing a loan restructure.
On the list was Xanadu, a sprawling 4.5-million-square-foot retail/entertainment development in the Meadowlands. The complex was to open in August; however, it debut has reportedly been delayed due to funding difficulties.
Yet Dan Fasulo, managing director and head of research for RCA, tells GlobeSt.com that Xanadu will eventually get built and be successful. "It's one of those projects that is too big to fail," he says. "The stakeholders have way too much capital at stake not to finish the project. At this point, obviously, they are going to be opening in a very difficult economic environment. They have already pushed back the opening a couple of times. I'd be surprised if it opens before the end of the year. That being said, it's one of those mega projects, like a Disney World, that might take many years for it to become profitable. But at some point, it will be a success."
In Ft. Lee, the 696,960-square-foot Centuria mixed-use project, is now in foreclosure after its original developer put the site up for sale. Fasulo says a project of that size would have difficulty getting financed in today's marketplace. Sitting in the shadow of the George Washington B
ridge, Centuria was to include mostly residential units, a hotel, medical office and detail.
"There is demand for a four-star hotel in Ft. Lee," Fasulo says. "They were planning on doing medical office, which would have been a home run. The retail could be successful even in a difficult environment. But the problem is, nobody wants to go out on a limb and take any risks now. So unfortunately, Centuria missed another cycle."
Other New Jersey properties on the RCA list are: 1135 Springfield Rd., a 126,000-square-foot industrial building in Union; Le Cross House, an 82-unit apartment building in Ft. Lee; 800 Madison St., a 217-unit apartment community in Hoboken; 85 Challenger Rd., a 235,057-square-foot office building in Ridgefield Park; the Tower, a 214,000-square-foot office building in Somerset; 65 Willowbrook Blvd., a 131,702-square-foot office building in Wayne; and the 59,000-square-foot former headquarters of now-defunct retailer Linens 'N Things in Clifton.
Fasulo maintains that naming these troubled properties will ultimately be good for the industry. "At the end of the day we think it's going to be a net plus because it is really going to help get the skeletons out of the closet and hopefully get us moving again," he says. "The market is not going to move forward until the distressed assets are cleaned up from the real estate world."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
