Related's LIC deed-in-lieu toodle-ooo

The Real Deal 

Developer and partner BentallGreenOak negotiating deed-in-lieu of foreclosure

The mantra that millennials wanted to “work where they live” drew some of New York’s biggest developers across the East River in the late 2010s to build Instagrammable offices in hot Queens and Brooklyn neighborhoods.

Today many of those offices remain empty, and now some developers are conceding that the gold rush never materialized. 

Case in point: Related Companies’ fund management arm and its partner BentallGreenOak are ready to walk away from the Point LIC, a small campus of converted warehouses in Long Island City that sit mostly vacant after six years. 

The developers have defaulted on their mortgage for the pair of seven-story buildings in the neighborhood’s Hunter’s Point section, sources told The Real Deal. Their lender, mortgage REIT BrightSpire Capital, is looking to sell the non-performing loans, and sources said the borrowers have agreed to hand the keys to the Point over to whoever buys the debt through a deed-in-lieu of foreclosure.

Representatives for Related Fund Management and BentallGreenOak did not respond to requests for comment. A spokesperson for BrightSpire — known until 2021 as Colony Credit Real Estate — declined to comment.

The mortgages on the two buildings total around $150 million, and BrightSpire will look to recoup as much of that as possible.

It’s the latest sign of distress in the office market, as high interest rates and a continued transition to hybrid work expose struggling investments.

Related and BenatallGreenOak paid nearly $104 million in 2016 to buy the two properties: a 130,000-square-foot former oil storage warehouse at 2100 49th Avenue, dubbed the Paragon Building, and a 220,000-square-foot building across the Long Island Expressway at 2109 Borden Avenue called the Blanchard Building.

The new owners spent $45 million overhauling the properties, building new entrances and lobbies, upgrading building systems and installing amenities like cafes and outdoor spaces that were all the rage for offices designed to attract a millennial workforce.

Hudson Yards is already showing cracks

The Village Spoke

In only a month after opening, New York’s most expensive private development is already falling apart.

If you look up from your phone camera for a second before you take a selfie of the Vessel, you’re bound to see something broken at Hudson Yards.

 Hudson Yards bills itself as New York’s newest neighborhood, however it reflects many of the shortcomings of the city’s prior superblock development projects.

The original World Trade Center’s Austin J. Tobin Plaza was an enclosure of skyscrapers along the Hudson River, inadvertently creating a brutal wind tunnel. Hudson Yards is much the same.

Brooklyn’s MetroTech Center lacked a unified vision with its variety pack of 90s-fad architecture and is today largely unremarkable. Hudson Yards developer Related Companies took a similar approach, commissioning numerous so-called “starchitects” to build what New York Times Architecture critic Micheal Kimmelman describes as an “architectural petting zoo.”

But Hudson Yards also appears to have created their own problems, particularly with the build quality of the development.

One day, this is going to be exposed as the Titanic of hyperdevelopment.

It's ironic that Hudson Yards already looks like a distressed area.

Hudson Yards was made possible with pilfered EB-5 funding that was meant for public housing developments through enabled cirvumvention and crooked gerrymandering

City Lab

Since its official unveiling last month, critics have been teeing off on Hudson Yards, the $25 billion office-and-apartment megaproject on Manhattan’s West Side. The Guardian’s Oliver Wainwright calls it “bargain-basement building-by-the-yard stuff that would feel more at home in the second-tier city of a developing economy.” In Curbed, Alexandra Lange writes that it suffers from “no contrast. No weirdness, no wildness, nothing off book.” The New York Times’ Michael Kimmelman describes it as a “vast neoliberal Zion.”

“New York politics and real estate are notoriously akin to Rashomon,” reads Kimmelman’s review. 

“Any verdict on an undertaking as costly and complex as Hudson Yards depends on one’s perspective.”

Views abound, sure, but so far, nobody seems to like what they see when they look at Hudson Yards. 

The project has managed to do something unique: unite all New Yorkers in a vernal equinox of acid contempt. Early reviews offer a litany of contrasts, with the development’s garish geometry and dull placelessness earning rebuke in equal measure. That’s before considering how certain features, particularly Thomas Heatherwick’s oft-derided shawarma-shaped bucket, square with other projects as “bellwethers pointing to exactly where our cities are going awry.”

However, among all the many reasons to feel salty about Hudson Yards, one perspective may deserve a place of privilege: the view from Harlem. Without their knowledge, the residents of a number of public housing developments helped to make Hudson Yards possible. The mega-luxury of this mini-Dubai was financed in part through a program that was supposed to help alleviate urban poverty. Hudson Yards ate Harlem’s lunch.


Specifically, the project raised at least $1.2 billion of its financing through a controversial investor visa program known as EB-5. This program enables immigrants to secure visas in exchange for real estate investments. Foreigners who pump between $500,000 and $1 million into U.S. real estate projects can purchase visas for their families, making it a favorite for wealthy families abroad, namely in China. EB-5 is supposed to be a way to jumpstart investment in remote rural areas, or distressed urban ones.


Hudson Yards, of course, is nobody’s idea of distressed. Located at the source of New York’s High Line, it’s the most expensive real-estate project in U.S. history. It could not possibly qualify as distressed under the terms of the program, or any understanding of the word. In order to buy EB-5 visas at the lower rate ($500,000), immigrant investors must put their money behind projects in areas with high unemployment—a proxy for need.

 Manhattan’s West Side may not suffer for lack of opportunity, but, as Kimmelman notes, New York real estate is a realm for Kurosawa-esque visionaries. The Related Companies, the developer behind Hudson Yards, raked in at least $1.2 billion in EB-5 funds for this project. To qualify, Related needed a work-around to bypass the distressed-area requirements—a pass that New York authorities were happy to issue.


Here’s how these requirement works: EB-5 visa applicants must invest a minimum of $500,000 in a project within a designated geographic area called a targeted employment area, or TEA. To be eligible for this financing, a project needs to qualify as falling within a TEA—which is going to be either a rural area or a distressed urban area. For an urban area to count as a TEA, it has to meet a certain unemployment threshold (150 percent of national unemployment).

 Lower Manhattan doesn’t meet this unemployment threshold, so Hudson Yards, on its own, can’t qualify as a distressed urban area. However, when Congress created the EB-5 visa as a part of immigration reform legislation in 1990, lawmakers did not specify how states should draw up the geographic boundaries for a TEA.


New York takes a rather liberal approach to drawing these lines. Empire State Development, the economic development agency for the New York state government, determines the boundaries for qualifying TEAs. Under state law, the agency has the authority to string together an unlimited number of census tracts in order to achieve the desired aggregate unemployment standard. Think of it as a form of creative financial gerrymandering.  

As I reported back in 2017, records obtained by CityLab under the Freedom of Information Act reveal the gerrymandered map that Empire State used to qualify Hudson Yards for EB-5 financing. This particular TEA snakes up from the West Side and includes Central Park. (Think about that: a map of Manhattan that claims Central Park as an economically troubled area.) Beyond the park, the qualifying zone for Hudson Yards captures several census tracts in Harlem, where public housing projects boost the overall unemployment figure.   

 These funds might have financed alternative developments in Harlem directly. Other developers have successfully raised EB-5 funds for projects in actually distressed areas of New York. For example, Asian Americans for Equality, a nonprofit organization, once pursued EB-5 funding to finance a food hub and university project in northeast Kansas City, a grocery store destroyed by Hurricane Sandy in the Far Rockaways, and an affordable housing complex in Queens’ Flushing neighborhood.  


Instead, Related sopped up hundreds of millions in funds never intended to finance luxury projects. 

The developer has successfully leveraged Harlem unemployment to raise more in EB-5 financing than any other developer in the nation. Related recently sought a third tranche of EB-5 funds for Hudson Yards, targeting $380 million—bringing the total as high as $1.6 billion, according to New York University’s Stern Center for Real Estate Finance Research.

Hudson Yards got twice as much tax subsidies as Amazon and their condos' property taxes are dirt cheap

6 Sq Ft

 The $20 billion, 28-acre Hudson Yards megaproject has been in the news recently as its official March 15 grand opening approaches. The New York Times reports that the nation’s largest residential development has gotten more than a little financial help from the city government to get there. In fact, public records–and a recent study by the New School–reveal that the development has received nearly $6 billion in the form of tax breaks and additional government assistance, twice the controversial $3 billion in incentives held out to Amazon to entice the retail tech giant to bring its second headquarters to Queens.


Where did $6 billion in taxpayer dollars go? Included in that tally were the $2.4 billion spent by the city to bring the 7 subway line to Hudson Yards; $1.2 billion was set aside for four acres of green space within Hudson Yards. The City Council kicked in $359 million to shore up interest payments on bonds when the development fell short of its revenue projections.

The point to be made is that the world’s most successful real estate developers–In this case Related 
 Companies and Oxford Properties Group–are among the biggest beneficiaries of generous government tax breaks, meant to encourage development.

Of the incentives given to the Hudson Yards project, defenders say they’ll reap an enormous benefit to the city in the form of thousands of new jobs created. The subway extension is definitely a boon, and who can argue with parks and improvements at what was for years a jumble of old factories, tenements and a stretch of rail yards once known as “Death Avenue.

But the city was lacking a subway stop on the far west side before the wealthy developers made it happen, and the counter-argument in both the case of Amazon and Hudson Yards is that big businesses with big profits at stake should pay their own way rather than getting government incentives–particularly tax breaks–sorely needed elsewhere.

The New School’s recent analysis, headed by Bridget Fisher and Flávia Leite, focuses on a particularly fortuitous property tax break that developers within the Hudson Yards area benefitted from which has cost the city more than $1 billion so far. This incentive can mean as much as a 40 percent discount for future developers in the area for as long as 20 years.