The sporting goods chain, founded by Morris A. Modell with a shop on Cortlandt Street in Manhattan in 1889, has struggled in recent years as its bread-and-butter business of sports team jerseys and men’s athletic wear declined. Mitch Modell even lent the business $6.7 million of his own money last year. In an interview with Fox Business’s Maria Bartiromo last month, Modell blamed the company’s struggling cash flow on “lousy” local sports teams and a warm winter that had hurt sales of cold-weather gear like boots and jackets. The company, known for its “Gotta Go to Mo’s” jingle, has 3,600 employees across the Northeast and Mid-Atlantic.

In February, Modell announced 32 store closures in the tri-state area and began a public campaign to ask New York City property owners to defer rents for 90 days while he tried to keep the company afloat. He told the New York Post that rent on a Harlem store owned by Thor Equities was “way too high. We told him to work with us or we have to close the store.” He told the paper that he was also trying to restructure leases at 150 and 280 Broadway in Lower Manhattan, at two Upper West Side locations, 795 Columbus Avenue and 348 Amsterdam Avenue, and at three locations in Brooklyn. Modell then claimed earlier this week that he was able to renegotiate leases for 13 of those locations, saving them from shuttering in the short term. 

Then, on Wednesday evening, Modell’s revealed that it would liquidate its remaining stock beginning on Friday, March 13, and start the process of shuttering all of its stores over the next seven weeks. While the company began in New York City, it has expanded across the East Coast to elsewhere in New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, D.C., Connecticut, Massachusetts and New Hampshire.

“Over the past year, we evaluated several options to restructure our business to allow us to maintain our current operations,” Modell said in a statement accompanying the bankruptcy announcement. “While we achieved some success, in partnership with our landlords and vendors, it was not enough to avoid a bankruptcy filing amid an extremely challenging environment for retailers … This is certainly not the outcome I wanted, and it is one of the most difficult days of my life. But I believe liquidation provides the greatest recovery for our creditors.”

The filing at U.S. Bankruptcy Court in Newark showed that the retailer owed tens of millions to its vendors, including a $9 million debt to Adidas, $8.8 million to Nike, $3.8 million to Under Armour, $1.8 million to Champion/Hanesbrands and $1.3 million to Rawlings Group.

Although Modell’s could simply file for bankruptcy and disappear for good, like fellow sporting goods giant Sports Authority, it’s also possible that the company could be acquired by a competitor, a private equity firm or even one of its vendors. However, retail experts say that the chain may not look like a very good investment right now.

The shopping experience can be a little lackluster at many New York City Modell’s locations, and they show that the company hasn’t kept up with retail trends, said retail consultant Kate Newlin.

“My instinct is that they’ve been trying to cut corners for years rather than investing in a retail experience,” Newlin said. “People who shop in a sporting goods store want information and education and good advice. There’s something very educative and luxe-y about being told, ‘These strings are the best for your daughter on her tennis racket.’ If you’re just going to buy a pair of Nike running shoes, you can do that on Amazon.”

She also said that it didn’t seem like a good strategy to publicly beg landlords for lower rents. 

“It’s a form of blackmail to say, ‘These are big stores and it would be tough to lose us, so now give us a break on the rent,’ ” Newlin noted. She added that he hadn’t articulated his vision for the company or how to turn it around in any of his public interviews, which doesn’t exactly inspire confidence for a potential buyer. 

“If a private equity company came in and said we’re buying 51 percent of this, they have to decide whether they want to keep the management,” she argued. “Nothing about these articles show that the management has a vision. It’s not an easy acquisition because they don’t have an idea of how to solve the problems. They just want some money to get them through the next 12 pay periods.”

Tom Mullaney, the managing director of restructuring services at JLL, has helped many companies negotiate the bankruptcy process over the past 30 years. He called Modell’s televised entreaties for help “a little unusual.”

“We typically counsel our clients to keep this stuff very close to the vest, because there are unintentional impacts,” like vendors deciding to cut off shipments to a retailer or demand payment upon delivery, which can cause even more liquidity issues, he noted.

Mullaney, who is currently helping Art Van Furniture through bankruptcy, described the process as “a bit of a rugby scrum” of competing interests. “History would suggest it will end up getting closed down, someone will buy the Modell’s Sporting Goods [intellectual] property and become an online provider. A lot of people are going to get hurt.” 

He added that “typically the secured creditors [like banks] come out pretty well. Where it becomes problematic is for an unsecured creditor — a landlord, for example, is an unsecured creditor. A judge would say you get one year’s rent or 15 percent of a lease.”

Below-market leases typically end up getting auctioned off under bankruptcy court supervision, Mullaney explained, and landlords sometimes have to buy back their own leases to ensure they don’t end up locked into low rents with a new tenant who buys the lease.

James Famularo, the president of the retail leasing team at Meridian Capital Group, said that Modell’s would have to modernize its stores and its online shopping experience to survive. He pointed to Foot Locker as an example of an older brand that was able to use social media and live events in its stores as a way to help stave off financial ruin.

“I think that Modell’s either would be acquired by another company, or they could pivot and really change with the times: do events in stores, maybe close the underperforming stores,” the veteran retail broker explained. “Get electronic, utilize all that’s out there and mesh it together with Modell’s history and brand.”  

The RECon event, which draws nearly 40,000 people and 1,000 exhibitors to Vegas, was originally set to take place May 17 to May 19 but organizers decided to suspend it this year due to concerns of COVID-19, the disease caused by the highly contagious new coronavirus. ISCS said it was “evaluating potential new dates and alternatives for later in the year” to reschedule RECon.

“The health and safety of our events is ICSC’s top priority,” the group said in a statement about the suspension. “We recognize the importance of RECon in helping you build and grow your businesses, and we appreciate your patience as we manage this situation.”

The coronavirus originated in China in December 2019, but has since spread to nearly 125,000 people in 118 countries, according to the World Health Organization, which categorized the virus as a pandemic this week. In the United States, there have been 1,215 reported cases with 36 deaths, according to the Centers for Disease Control and Prevention’s most recent numbers.

The pandemic has caused the stock market to plummet and led organizers to cancel sporting events, parades and other large gatherings across the country. Last week, Reed MIDEM rescheduled the annual Le Marché International des Professionnels de L’immobilier conference in Cannes, France — one of the biggest real estate events in the world — by three months due to coronavirus concerns.

Yesterday, Mayor Bill de Blasio declared a state of emergency in New York City while Governor Andrew Cuomo banned most public gatherings of more than 500 people across the state to combat the outbreak.

Real estate brokerages around the city have taken steps to slow the spread of the disease by limiting the number of people at corporate events and encouraging employees to work from home, with Newmark Knight Frank taking the step to station a nurse at its office to check if visitors and staff have a fever, as Commercial Observer previously reported. So far, Brookfield Property Partners and Meridian Capital Group have had employees who have tested positive for coronavirus.

In 20 years, our children might say, “People used to work in offices before the Coronavirus Pandemic of 2020.”

Whether that’s the case or not, a large-scale global experiment is underway concerning just how effective work-from-home is — and how necessary offices are.

“I have no doubt that the office will be reshaped,” said Tom Vecchione, a principal at architect and interior design firm Vocon. “Major crises make us rethink and replan what the normal was before and what the new normal needs to be.”

“We will think very differently about how we group up, how we meet, how we gather and how we create work and review work,” Vecchione added.

Gov. Andrew Cuomo ordered two weeks ago that 100 percent of nonessential workers in New York State remain home. Companies in New York City had previously closed their offices before the announcement, some after employees tested positive for COVID-19, the disease caused by the novel coronavirus. Employees at Brookfield Properties, Meridian Capital Group and members of WeWork and Convene were found to have COVID-19.

The pandemic has had a severe global economic impact as many businesses have had to essentially pause their operations or shutter — with thousands of workers laid off. But for the ones still operating, the health crisis has forcibly provided the largest case study of working from home in history.

“This is a research goldmine,” said Barbara Larson, a professor of management at Northeastern University who has studied remote work for years.

While there have been previous studies on the benefits and drawbacks of remote work, they have only targeted a handful of companies at a time and mostly ones that require a minimal level of supervision and collaboration, Larson said. Now, researchers will be able to see the impact on a vast number of corporations in multiple different countries and industries.

“What we don’t know yet is what happens in terms of productivity for jobs that require considerably higher levels of collaboration,” she said. “We have lots of reasons to believe collaboration can occur in a remote setting, but the practices to enable that are still pretty undeveloped and they’re very understudied.”

Aside from the research potential, the global work-from-home experiment could have an impact on companies’ office space in the future. If employers see that it’s more or less business as usual, it could make them rethink their remote work policies, leading some to take less office space or even have no physical presence at all whenever the world returns to some level of normalcy.

“For each different type of business,  folks are going to see how effectively their business can be done without being able to be in an office,” said Bob Knakal, the chairman of JLL’s New York investment sales. “This experiment could confirm traditional perceptions about the collaborative benefits of being in an office together or may change those perceptions for certain businesses or parts of certain businesses.”

“Each business will have to take a look back, after the experiment is over, and make a determination as to what the most effective way to deliver their service or product is and make office space decisions based upon what they have experienced, what they think is best for their business and, importantly, what is best for their clients and customers,” Knakal added.

Eugene Lee, the COO of flexible workspace provider Knotel, said the pandemic will make working from home “a permanent part of how we do business” whenever people can return to offices.

“I would expect when we’re on the other side of this that many companies will realize there are different models of working,” Lee said. “The general trends are that having people show up in the same office and having these massive footprints is going to be proven that that’s not the only way we have to do business.”

Landlords could be on the hook to find more tenants in their properties if that’s the case, but Lee said it’s exactly what Knotel has planned for with its model of leasing space from owners then offering mid-level companies flexible deals. (Amidst the coronavirus epidemic, the company has pivoted to trying to partner with the government to offer up its now-mostly-empty portfolio for emergency needs.)

“This is the definition of what Knotel was built for,” he said. “I think flexibility is going to be something that is valuable to people right now.”

But not everybody’s convinced companies will start ditching their offices en masse to let employees work on their couch after the pandemic wanes. James Wacht, the president of brokerage Lee & Associates NYC, said he can’t wait until his company can get back to the office.

“I’m a big believer that proximity creates opportunities and if you lose that — employees not meeting each other — it’s just a lot less communication going on,” Wacht said. “Lack of communication, at least in our business where information is very important, is a big negative. My expectation is we’re not going to change how we conduct business as a result of this.”

But even before the coronavirus pandemic forced companies to adopt work-from-home policies, the practice has had a large surge in recent years thanks to the increase of home internet speeds and the adoption of software like Slack and Zoom that makes it easier for teams to stay in touch from anywhere in the world.

A 2019 study by the Society for Human Resources Management found that 69 percent of organizations in the United State now give employees the option to work from home, a 13 percent increase from 2015. The study also found that 27 percent of companies allow workers to work remotely full-time. And there’s evidence to show that’s a good thing for employers.

Stanford University researcher Nicholas Bloom studied a 16,000-employee Chinese travel agency that allowed call center employees to work from home over a nine-month period. Bloom’s findings showed a 13 percent performance increase from those allowed to work remotely while the company’s attrition rate halved.

“The reasons for that appeared to be they were actually working more,” Larson said, adding that one cause for the increase in productivity was employees spent less time commuting to and from work.

She also said employees were able to create a workspace tailored specifically to how they like to work instead of being forced to adapt to office life.

“[Instead of] working in cubicles in a very large customer service center, they were able to create a workspace within their homes that were more customized to their needs,” Larson said. “Having the ability to create a comfortable workspace was a benefit.”

Bloom’s study also found that the number of sick days employees took decreased because they were more likely to work their shift if they were “on the edge” of being sick instead of calling out the entire day, Larson said. And other studies have shown evidence that working from home leads to decreases in conflicts with family over the number of times employees spend working, according to Larson.

One of the keys to successfully switching to remote work is putting in place policies to help the transition — something many companies didn’t have the time to do because of the coronavirus, Larson said. The best companies allowing working from home sometimes require employees to have a dedicated desk to work at or provide child or elder care so they’re less distracted tending to their families.

“The really well-run companies — this is only a fraction of all companies that allow remote work — will actually provide training for remote work,” Larson said. “The truly excellent companies will also train for the more social and psychological aspects of remote work.”

But while productivity does increase when employees work remotely, there can be a sense of isolation some workers feel because they’re not talking with coworkers or their supervisors, Larson said.

“If you talk to employees working from home, one of their biggest concerns is that they’re not getting as much communication,” she said. “They feel like they just disappear when they go home.”

Larson gives companies tips to increase social interaction by suggesting they start video conference meetings early to give people time to chat about not strictly work topics and host virtual happy hours or pizza parties. Knotel has practiced similar tactics after the coronavirus forced them to move their corporate workforce completely to remote; CEO Amol Sarva hosted a virtual St. Patrick’s Day Party, Lee said.

There have been some public failures in remote work even as the practice becomes more widespread. Former Yahoo! CEO Marissa Mayer made waves in 2013 when she called the technology company’s then-11,500 employees entirely back into the office, The Guardian reported. Bank of America, Aetna and IBM have also cut back or banned telecommuting, NBC News reported.

And in this instance, the coronavirus forcibly created this work-from-home experiment, giving companies little time to get the best practices in place. Employees are also dealing with anxiety about the dangers of the pandemic, unable to leave their homes much and in many instances forced to handle childcare themselves during work hours—this particular experiment might give employers a bad idea on what remote work is like under normal circumstances, Larson said.

“I do think, very strongly, if companies take the next two months as indicative of what it’s like to have employees working remotely, they risk drawing some bad conclusions,” Larson said. “It’s not at all a typical remote work situation.”

Vecchione said Vocon had some work-from-home policy in place beforehand, but it wasn’t as robust as what’s needed now to get things done while the entire 70-person New York office switches to telecommuting.

“The hardest thing is mentorship and communication,” Vecchione said. “I found that we’re spending a lot of time structuring communication.”

Knotel has always been open to the idea of telecommuting for its corporate workers — with many working remotely before the pandemic — but switching the entire company to the model has had some drawbacks, Lee said.

“In spite of the best tools and systems you have, a personal live interaction is maybe the quickest way to deal with some complicated issue,” Lee said.

However, both Vecchione and Lee have seen some advantages to the switch, with meetings at Knotel running swifter than before.

“Lots of people waste lots of time in meetings and one of the interesting things about working remotely is people become more efficient and more focused,” he said. “Nobody wants to be on a video call longer than they need to be.”

And with more independence in employees’ work-life, Vecchione said, Vocon’s became a more accountable organization.

“People have started to take a lot more ownership of their independent work,” he said. “Everyone realized that they have to be so overly accountable and get things done.”

Regardless of the impression employers get about remote work during these times, many believe the coronavirus will have a major impact on the future of office space to come.

“The design of the workplace in three months or six months or nine months — we’re not going back,” Knotel’s Sarva said. “It will not be back to two years ago. The workplace will be different, density is going to change. Hygiene and cleaning and operations are going to change, even build-outs will change.”

One casualty could be the open floor plan offices companies have embraced in the past decade, Vocon’s Vecchione said. The Wall Street Journal reported this month that the model is basically a petri dish, ready to spread diseases like COVID-19, and Vecchione has already talked to clients rethinking them.

“[Companies are looking] how to create a healthy workspace versus just a well-run workplace,” Vecchione said. “Clients have expressed concerns about over-occupancy and what are some safeguards we could put in so that we make for a healthy, sustainable environment.”

A source who did not want to be named said the rethinking of open floor plans could wreak havoc on an already struggling coworking sector, since people will be wary of packing together in tight confines with strangers after this.

An increase in working from home can allow companies to move away from the open floor plan model easily. Corporations can reduce footprints and offer “hot desks” where employers stopping in the office simply claim a desk for a day, Larson said.

Aside from saving money on real estate costs, it can let companies become greener as they use less energy in offices and have fewer people driving into work.

“I think another reason employers are considering [allowing more telecommuting] is the [positive] environmental impact you have,” Larson said. “You can lower the carbon footprint of a company.”

“The unprecedented economic realities of this public health emergency have touched literally every sector of the economy,” a statement from the firm that was emailed to CO in response to an inquiry regarding the layoffs, reads. “Businesses on every level have a fiduciary responsibility to chart a course today that will ensure it can be a strong participant in the recovery that will follow tomorrow. Accordingly, we have determined the need to reduce a small number of support roles and back office functions.”

The statement goes on to state: “This is not a decision we take lightly, however we believe it is prudent to ensure we can continue the highest level of performance for our clients. Despite the market’s downturn, we are extremely active and our deal pipeline remains robust, reflecting the inherent confidence our clients have in our nation, our shared economic future and the professionalism of this firm.”

Headquartered at One Battery Park Plaza, across the street from Commercial Observer’s offices, Meridian is one of the city’s most active brokerages. Ralph Herzka founded the firm 30 years ago, growing the firm’s presence nationally into the behemoth it is today. A constant figure on CO’s Power 50 list, in 2018 Meridian closed $37 billion of transactions, including $20 billion worth of debt deals in New York alone. 

 “During this pandemic we will remain as focused as ever on our clients as well as the health and well-being of our employees, their families and loved ones,” the statement ended. 

A report from the Center for an Urban Future (CUF) released yesterday found that industries suffering from the worst loss of jobs and profits — including restaurants, retail and personal care services — are “overrepresented” in Brooklyn, Queens, the Bronx and Staten Island while Manhattan, with is large share of office jobs, hasn’t felt the impact as strongly as opposed to previous downturns.

“I think more than previous recessions, this one is really being felt in the boroughs outside of Manhattan,” said Jonathan Bowles, the executive of the think tank and the co-author of the report. “In a lot of downturns, the first thought is about Wall Street and the finance industry. This one is different.”

The CUF’s report only studied where jobs are located — not where the affected workers live — but Bowles said previous data show employees of the restaurant, retail and hospitality industry mostly live in the outer boroughs. For example, a previous CUF study showed 80 percent of hotel workers live outside of Manhattan.

A separate study by New York University’s Furman Center released this week showed that nearly a third of households in New York City financially rely on a person likely to lose their income because of layoffs or closures caused by the pandemic. The majority of the workers in those “vulnerable occupations” are low-income New Yorkers and people of color, according to the report.

The CUF’s report found that nearly one in five jobs, or 19.3 percent, in the other boroughs are in the retail and restaurant industries and employed 311,470 people last year. Those two sectors only make up about 15.2 percent of private-sector jobs in Manhattan.

Staten Island has the largest share of its private-sector jobs made up from retailers and restaurants, 23.8 percent, followed by Brooklyn with 19.2 percent.

As local governments forced non-essential retailers to close and restaurants to switch to take-out or to-go models to limit the spread of the virus, owners have had to lay off thousands of workers.

Since March 23, nearly 150 restaurant and hotel entities in New York City have filed Worker Adjustment and Retraining Notification (WARN) Act notices — required by employers to let workers know about upcoming job cuts — that will impact at least 12,000 employees, state records show. The New York City Hospitality Alliance surveyed 1,870 restaurants, bars and nightclub purveyors and found they expected to lay off or furlough more than 67,650 people.

While the office sector has sustained some layoffs — Financial District-based Meridian Capital Group let go of some of its corporate support and back-office groups yesterday and flexible workspace provider Knotel cut half of its worldwide staff last week — the sector hasn’t been hit as hard.

“Office jobs have held up better in this crisis, so far,” Bowles said. “I’m sure we’re going to see job losses in finance, in advertising, in media and in other fields, but right now a lot of office sectors are doing better in part because they can work from home.”

Manhattan has the lion’s share of the city’s office jobs, with 83.2 percent of all jobs in the office sector, according to CUF’s report. That’s followed by Brooklyn with 7.4 percent, Queens with 6.6 percent, the Bronx with 2.3 percent and Staten Island’s 0.9 percent.

Brooklyn has had a huge boom in office construction in recent years, with a CBRE report last year finding more than 2.31 million square feet of either new construction, space being redeveloped, or space that recently came online in the borough. But Brooklyn has only added 35,033 office jobs in the past decade, according to CUF.

“The boroughs still have a surprisingly small number of office jobs,” said Bowles “The boroughs didn’t add that many office jobs over the boom of the last decade.”

One sector represented the most in Manhattan and being hit with huge job losses is the hotel industry, Bowles said. The coronavirus outbreak obliterated travel and caused hotels to lose billions in room revenues, with institutions like The Plaza Hotel and The Carlyle Hotel laying off hundreds of workers.

Of the total 52,555 hospitality jobs in the city, Manhattan has 87.4 percent, according to the report. But the other boroughs have started to catch up; they’ve added hotel jobs at more than twice the rate of Manhattan from 2009 to 2019.

The findings suggest that the outer boroughs will be hit the hardest from the pandemic and Bowles said it would make sense for them to add more office sector jobs in the future.

“I think it would add balance to the economy of each of the boroughs, I think it would help in a crisis like this,” he said. “The boroughs should really make it a point to try to diversify their own economy by adding more office jobs.”

The cuts at the Toronto-based Avison Young’s tri-state offices came from salaried employees and brokers in the more than 200 person team in New York, New Jersey and Connecticut, The Real Deal first reported. While TRD originally reported the brokerage laid off 100 staff members, a spokeswoman for Avison Young told Commercial Observer it was only about a dozen people  — with less than 10 in the New York office — and part of a small number of employees laid off or furloughed throughout the entire company.

The spokeswoman declined to provide exact numbers of staffers cut and details about severance packages, but sent a statement from last month that detailed Avison Young’s plan to temporarily cut the pay of its executive team to minimize the number of layoffs or furloughs.

“The highest percentage cuts are being taken by the firm’s entire executive team,” the statement said. “Our staff have responded admirably and graciously, and we are confident that we will emerge from this challenging time stronger together. Our long-term goal, as ever, remains: to take care of our people, clients and communities.”

Avison Young, which opened its New York City outpost in 2012, is the latest brokerage to make cuts amidst the coronavirus pandemic, which has ground leasing and sales mostly to a halt. Meridian Capital Group made a “small number of layoffs” in its corporate support and back-office groups, investment bank and brokerage firm Cantor Fitzgerald plans to slash hundreds of jobs and Compass laid off about 375 workers.

Coworking companies have been particularly hit hard by the fallout from the coronavirus pandemic with Industrious, Convene, The Wing and Knotel cutting staff and WeWork planning to make another round of cuts next month. Knotel has also been in talks to give back about 1-million-square-feet of its 5-million-square-foot portfolio.

The 10-year, interest-only loan retired previous debt on the 531-unit Meadowbrook Apartments at 1700 Huntingdon Pike in Huntingdon Valley, sources told CO. 

Greystone’s Dan Sacks originated the financing out of the company’s New York office. And Meridian Capital Group’s David Fisher advised in the arrangement of the debt financing.

 “[We always work] tirelessly to ensure that we get the most out of the current market environment and secure the best financing for our needs,” Alan Lindy, principal of Lindy Property, said in prepared remarks. “We can’t say enough about Dan and his team’s professionalism, creativity and willingness to go above and beyond for us — their care for our business is why we keep coming back to them.”

Built in 1968, the garden-style complex sports studio, one-, two- and three-bedroom residences, each with in-unit washers and dryers and amenities such as remote-controlled fireplaces. Amenities at the location include a business center, a clubhouse, a clubroom, a library, a community garden and a dog park. 

Monthly rents at Meadowbrook range from $1,255 to around $2,750, according to information from Apartments.com.

The site is located just a few minutes away from Holy Redeemer Hospital and Abington Hospital and it’s surrounded by a range of primary and secondary schools, child care centers, smaller universities and a satellite university campus. It’s also a short distance from the Noble and Roslyn Southeastern Pennsylvania Transportation Authority train stations.

The 24-month balance sheet loan features full-term interest only payments and was arranged by Meridian Capital Group’s Kovi Elkus, Jackie Tran and Seth Grossman. Meridian officials declined to confirm the lender’s identity or comment on the property’s new owner. 

On the heels of the COVID-19 pandemic, what started out as a CMBS bid for the financing switched to a balance sheet execution.  

“We initially approached lenders in the beginning of March with the intention of obtaining long-term fixed-rate financing and procured extremely attractive bids. A few days later, the entire world rapidly changed. While many lenders pulled back on lending entirely, we worked with a long-term Meridian lender that initially provided a strong CMBS bid but was able to quickly pivot and structure the attractive balance sheet terms we successfully closed,” Elkus said. “As the market recovers, we are constantly evaluating fixed-rate options with the ultimate intent to convert this to a permanent loan. Every aspect of closing a large transaction in the current COVID-19 environment is tricky, including inspections and virtual tours, appraisal and third-party reports, recording documents, and more. Our client’s sophistication shined, and the lender was quick to realize the quality of the asset, tenant, long-term lease, and strength of the borrower, allowing for a smooth close in turbulent times.” 

The Class A warehouse, at 6001 East Tropical Parkway, comprises 855,000 square feet and is fully leased to Amazon on a triple net basis for the next 14 years. The property was developed by VanTrust Real Estate in 2019 as a build-to-suit for Amazon, and is the largest fulfillment center in Nevada for the e-commerce giant, employing more than 1,500 people. It features 41-foot ceiling heights, large truck courts and insulated buildings. 

Berkadia provided the seven-year Freddie Mac loan, which has a rate of 234 basis points over 30-day LIBOR and features full-term interest-only payments. Meridian Capital Group’s Marvin Jeremias and Meyer Ovadia negotiated the debt.

The Dakota, at 6205 Pacific Avenue Southeast, includes 156 apartments with private patios and balconies. Its amenities include a swimming pool and spa, a state-of-the-art fitness center, a clubhouse, a community billiard and game room, a television theater room and library and covered parking.

“We are pleased to have advised American Capital Group on the refinance of The Dakota Apartments,” Jeremias said in prepared remarks. “Meridian was able to negotiate highly favorable terms for this transaction due to the sterling reputation and track record of the sponsorship and the quality of the asset. Working on a transaction in the current COVID-19 climate presented numerous challenges, however, all parties worked efficiently and creatively to deliver a stellar outcome for our client.” 

Last week, the Meridian team arranged $68 million in acquisition financing from Goldman Sachs for Tropical Distribution Center I, an industrial distribution center in Las Vegas that is fully leased by Amazon. 

They predicted that half of all restaurants will close up shop before the pandemic is over. 

“Twenty percent of tenants that we’ve surveyed have handed back their keys thus far,” said Steven Kamali, founder of consulting firm Hospitality House.”We anticipate over 30 percent, in addition to that, handing back their keys.”

“That’s half the population of restaurants, effectively in some shape or from, giving their keys back,” he said. 

The fate of the city’s vaunted streetfront retail was discussed on two of four panels hosted by Commercial Observer for its Fourth Annual Retail Forum, this one focused on retail in the pandemic era. The discussions covered the design of retail stores, the need for omnichannel shopping experiences, what an opened American Dream mall in New Jersey will look like, and how the restaurant and hospitality industries are going to fare in the coming months. 

Kamali’s comment came during a panel discussion called “Rescuing Restaurants: The Future of Food & Beverage”, which was moderated by Rich Sarkis, president of real estate data firm Reonomy. James Famularo, head of retail leasing at Meridian Capital Group agreed with Kamali’s projection, which was based on a survey of 850 restaurateurs with 2,000 restaurants, out of roughly 25,000 food and beverage businesses in the city. “If half of the restaurants are going to close, the other half, in my mind, do twice as much business,” he said.

The key challenges that restaurants will face when they do open, in addition to the reduced occupancy limits, is reduced traffic from tourism and the office crowd, Whitney Arcaro, head of retail leasing at RXR Realty and Julio Bruno, the CEO of Time Out, pointed out. It’s uncertain when those will return to pre-pandemic numbers, they added. 

Bruno, whose company operates food halls in Europe and the United States, including one in Dumbo that opened last year, said he wouldn’t consider reopening with anything less than 50 percent capacity. 

One outcome could be more integration between landlords and restaurant tenants, with models evolving from traditional leases to revenue-share agreements, management fees or other models, said Kamali.

One glimmer of hope is that the newest congressional bill may update the Paycheck Protection Program to be better suited for restaurants. Since the program was designed to keep people employed, it missed the mark for restaurants, who can’t employ people while they’re closed, and whose greatest expense is rent, according to Andrew Rigie, head of the New York City Hospitality Alliance.

Rigie said he’s been working with Speaker Corey Johnson to expand al fresco dining in the city through the reduction of sidewalk cafe fees and opening streets to pedestrian traffic. “New Yorkers recognize that it’s our storefront businesses that are not only part of the economic footprint of the city, but the social fabric and we really need to support them,” Rigie said.

He spoke during a session titled “Retail Response: Strategies for Safeguarding NYC’s Retail & Restaurant Tenants” on reopening restaurants and retail stores that was moderated by Neal Weinstein, a partner at Ingram Yuzek Gainen Carroll & Bertolotti. Panelists also included architect Jeffrey Beers, president of Jeffrey Beers International, landlord Fred Posniak, senior vice president of Empire State Realty Trust, and retail broker Jeffrey Roseman of Newmark Knight Frank.

Roseman had a cheerier view than the earlier panel, saying that, of the tenants he’s spoken to, “no one has raised a white flag.” Nevertheless, panelists agreed that the pandemic was an accelerant, and causing the demise of already ailing retailers, something Weinstein dubbed “retail Darwinism.” Rosman pointed out that J. Crew, JCPenney, and Neiman Marcus, all well-known retailers who filed for bankruptcy recently, were struggling for years, and some of them because of private equity. “These were great companies that were taken out of the hands of the retailer, or the merchant,” Roseman said. 

Posniak said he’s keeping an open dialogue with tenants, but felt that some of the larger retailers were taking advantage of the situation. “Small mom-and-pop guys, we’ll try and work with them, but the large chains that have the wherewithal, we expect them to fulfill their obligations,” Posniak said.

The group discussed the many changes that will take place, from contactless ordering to glass partitions to more private dining options. “The challenge for us is how to make the restaurant exciting and desirable but under a distancing paradigm,” Beers said. 

Of course, restaurants aren’t the only establishments that will need to be rethought. Every kind of retail, from street retail, to open-air shopping centers, to enclosed malls are learning to navigate the new reality.

On a panel titled “What’s Next for Retail? Taking a Look at the Future Store” about the future of stores, Kenneth Bernstein, CEO of Acadia Realty Trust, Barrie Scardina, Cushman & Wakefield’s head of retail, and Liz Edmiston, CEO of fashion brands Dynamite and Garage, discussed the issue from the perspective of the landlord, the tenant, and the broker. The panel was moderated by Jonathan Mechanic, head of Fried Frank’s real estate department.

Edmiston said her company, Groupe Dynamite, sees the new shopping experience as a way to re-engage with customers through social media. On store design, they’re planning to have contactless returns and pickups, quarantining products returned from the fitting room for up to 24 hours, and considering ways to entertain queuing customers. 

Scardina pointed out that hands-on shopping experiences for products like clothes and makeup would be greatly changed, and some innovative technologies will help with that. 

In keeping with a consistent theme she also said that the crisis would be an accelerator of existing trends, for better or worse. 

Bernstein agreed that it would accelerate the death of some models, and would allow newer brands to flourish, particularly ones that excel in omnichannel sales. He expects to see a rise in direct-to-consumer brands, which view physical retail as an important component of an overall strategy. “Some young brands might not make it to the other side, but those who will, will be exciting,” Bernstein said. “They’ll be the enticement tenant of the future rather than large box retailers.”

A good example of where all these trends will be tested is at the American Dream Mall, the long-awaited 3 million-square-foot retail and entertainment complex in New Jersey. Some parts of it had opened in the fall, but the grand opening of its shops was scheduled for March 19, unfortunate timing to say the least. 

“It seemed like five days before that, the world went crazy,” said Ken Downing, chief creative officer of the mall’s developer Triple Five.

Downing was joined by Debbie Kalisky of GH+A Design Studios, Gerald Raines, the Senior Vice President of location-based experiences at ViacomCBS, and Gregory Tannor of Lee & Associates to discuss the future of the mall given the current reality in a panel entitled “American Dream & Socializing in the Post-Coronavirus World.” The session was moderated by Raymond Catlin, the executive vice president of Schimenti Construction Company.

What makes American Dream unique, said Kalisky, is that it was designed to be anchored by attractions rather than shopping, and in fact the space is roughly 45 percent retail and 55 percent entertainment, including an indoor ski slope, a water park, and the Nickelodeon Universe theme park.

Downing said the mall will reopen with the appropriate safety precautions, but was optimistic that people will be eager to get out once restrictions are lifted. Raines said that with camps potentially closed throughout the summer, parents will be looking for somewhere to take their kids. Capacity will be reduced at the parks by more than half. 

Tannor said that his son’s camp had been cancelled, but said safety would be paramount before he could consider taking his kid to an amusement park, or waterpark. “That’s going to be at the forefront of everyone’s minds,” he said. 

Bank OZK provided the 36-month debt in a transaction arranged by Meridian Capital Group’s Adam Hakim, James Murad and Andrew Iadeluca. 

Piermont Properties — led by Michael Grey and Jeff Novick — are developing the luxury property at 188-11 Hillside Avenue in the Jamaica Estates neighborhood of Queens, after filing permits in July, 2019. When completed, the seven-story, 120,905-square-foot building will include 101 residential units and 19,655 square feet of medical office space. The asset will also feature a 75-space parking garage for residents and medical tenants.

The property was designed by Meltzer/Mandl Architects.

“Bank OZK provided Piermont Properties with attractive financing that will allow for the completion of this new, best-in-class, mixed-use development in the center of Jamaica Estates,” Hakim said in prepared remarks. “The building will not only provide Manhattan-quality luxury housing at attractive Queens rents but will also provide the market with class-A medical office space, which has historically been vastly under supplied in this submarket.” 

Piermont has another mixed-use property with a medical office component not too far away, Q-East at 178-02 Hillside Avenue. The asset consists of 131 apartments with 25,000 square feet of medical office space and a 10,000-square-foot storefront that was pre-leased to CVS during the property’s development. As previously reported by CO, Piermont landed a $61 million refinance from Annaly Capital in December in a transaction that was also negotiated by the same Meridian team.

Bank OZK officials couldn’t immediately be reached for comment. 

The seven bills offer a range of protections by capping delivery fees on restaurant orders, suspending sidewalk cafe licensing fees into winter, and temporarily pausing the enforcement of personal liability provisions in leases for commercial tenants impacted by COVID-19. 

The aid is considered critical to New York’s retail businesses, which have now been closed for more than two months, or operating under severe restrictions.

Two of the bills target third-party delivery apps like GrubHub and UberEats, and address issues that existed prior to the pandemic. The first prohibits third-party delivery apps from collecting fees from phone leads that don’t result in sales, and the second caps delivery fees at 15 percent per order and any additional fees at 5 percent per order. The bills, which were passed by the city council last month, go into effect on June 2.  

Another bill extended the suspension of fees for sidewalk cafes through February 2021. 

“This legislation is an important first step in planning for a safe reopening of NYC’s restaurants with sidewalk cafes figuring into a recovery strategy to support socially distanced dining and expanded seating capacity,” said council member Andrew Cohen, in prepared remarks.

In addition, one of the bills suspended renewals for city-issued licenses and permits for the duration of the state of emergency plus an additional 45 days. 

Another two bills focus on commercial tenants, by prohibiting landlords from going after the tenant’s personal assets if they were mandated to close because of the coronavirus. The bills prohibit the enforcement of personal liability clauses in commercial leases and rental agreements, and classify threats to do so, or any threat to a business impacted by COVID-19, as harassment. Both are effective immediately. 

Experts are projecting that up to 50 percent of New York restaurants could close their doors permanently, without adequate relief. Most of the city’s restaurants were locked out of the federal Paycheck Protection Program, either due to lack of access or because the program was designed to focus on employment rather than fixed costs like rent.

James Famularo, head of retail leasing at Meridian Capital Group, said the provisions designed to help tenants could actually lead to more closures, while putting a tremendous amount of pressure on landlords. “You’re going to see a lot of closures, a lot of people who would have fought their way through this,” he said. “Now they can just hand their keys back.”  

Meridian Capital Group negotiated the 10-year debt, which has a rate of 2.94 percent and features five years of interest-only payments. Meridian’s David Cohen, Abe Schonfeld and Mordy Schwartz led the deal. 

“Despite the market’s growing concerns with the ongoing pandemic, we worked tirelessly to secure the best financing for our client and Meridian, locking-in application proceeds at a sub- 3 percent rate,” Dan Sacks, a managing director at Greystone, told CO. 

The property, at 211 Eisenhower Parkway, comprises 220 one- and two-bedroom residences, many of which have patios and balconies. Community amenities include a heated swimming pool, a private clubhouse, a fitness center and sports court and secure underground parking.

“Despite the challenges presented by COVID-19, Meridian was able to negotiate favorable terms for our client including a historically low rate and no debt service reserves, ensuring the ongoing success of this stunning property, which also maintained 100 percent rent collections over the last few months,” Meridian’s Israel Schubert said in prepared remarks..

Roseland, N.J.-based Squiretown Properties broke ground on the 21-acre property in October 2015, and on the fifth building in May 2018.

REBNY cut about 10 percent of its staff, decreased the salaries of its executives by 10 percent and dropped President James Whelan’s pay by one-third, The Real Deal reported.

“The COVID-19 pandemic has inflicted profound damage on New York City, its people and its economy,” a spokeswoman for REBNY said in a statement. “REBNY is not immune to or insulated from that impact. To manage our budget issues, we have focused on decreasing expenses including salary cuts, staff reductions and other measures.”

In a memo sent to members obtained by TRD, REBNY said it expects to have a $4 million revenue shortfall this year after payment of membership dues “slowed to a trickle” while the group is unable to host fundraisers during the pandemic.

The coronavirus pandemic essentially paused most real estate transactions in the city for three months, with a REBNY report finding that the city lost more than $160 million in tax revenue generated from investment and residential sales from March until May.

Brokerages like Avison Young, JLL and Meridian Capital Group have laid off or furloughed staff in the wake of the pandemic while landlords have dealt with uncollected rents for retail and office tenants.

REBNY faced a series of public losses last year — most notably Albany passing reforms to the state’s rent-stabilization system the real estate industry unanimously opposed — but has taken measures to help its members during the pandemic. It advocated for federal relief for small businesses in the city, released guidelines for in-person showings post-COVID-19 and launched a Coronavirus Resource Hub.

Meridian Capital Group’s Drew Anderman and Alan Blank negotiated the 16-year Freddie Mac loan, which features a 40-year amortization schedule. Capital One’s Evan Williams led the financing on behalf of the bank. 

The three-story affordable housing property—at 5010 North Nob Hill Road, less than an hour from Miami—is subject to a long-term Section 8 contract and comprises 123 units. 

“This acquisition and significant renovation of Federation Sunrise by Fairstead will preserve high-quality affordable housing for seniors in South Florida for at least the next 30 years,” Anderman said in prepared remarks. “Fairstead is one of the best affordable housing developers in the country and we are proud to partner with them on this important initiative.” 

Now that the acquisition is complete, Fairstead plans on fully renovating the property’s exterior as well as all common areas.

“Fairstead is thankful to Meridian and Capital One for helping us secure this loan, which will allow for the acquisition and subsequent substantial renovation of Federation Sunrise,” Will Blodgett, co-founder and partner of Fairstead, said. “Through this process, Fairstead will significantly upgrade the entire property and ensure the building remains affordable for at least the next 30 years.” 

Meridian Capital Group’s Adam Hakim and James Murad negotiated the 30-month debt on behalf of Tankhouse’s Sam Alison-Mayne and Sebastian Mendez.

The five-story property, at 450 Warren Street between Bond and Nevins Street, will include 18 residences — each with private outdoor space — as well as 4,015 square feet of commercial space. The boutique condo development will be the first of its kind following Gowanus’ rezoning. 

Dumbo, Brooklyn-based Tankhouse filed permits for the five-story building in July 2019.

“Tankhouse has identified an ideal site that benefits from the beautiful residential streetscape of Boerum Hill combined with the exciting explosion of growth coming from Gowanus,” Hakim said.  “Additionally, Bank Hapoalim did a fantastic job of working through this closing in an uncertain time and providing the borrower with the funding needed to see construction of this project through to fruition.”

Last month, the same Meridian team arranged $29 million in construction debt for a new mixed-use development in Queens. Bank OZK was the lender in that instance.

Meridian Capital Group’s Israel Schubert and Josh Munk negotiated the debt, which comprises three 10-year Freddie Mac loans with rates of 2.98 percent and full-term interest-only payments. Marc Soto, a vice president at Capital One, led the financing on behalf of the lender.

“Despite the challenges and hurdles encountered as a result of COVID-19, Meridian was able to negotiate a truly remarkable large cash-out refinance featuring full-term interest-only payments at rates below 3 percent during the height of the pandemic,” Munk said.

Meridian declined to comment on the sponsor’s identity but a source familiar with the transaction said the multifamily portfolio is owned by Sovereign Properties. 

It includes Woodmill Apartments at 1300 South Farmview Drive and Baytree Apartment Homes at 218 Bay Tree Road in Dover, Del.; Village of Canterbury at 900 Rembrandt Circle in Newark, Del.; and Arundel Apartments at 3009 Crossfork Drive in Wilmington, Del. Amenities include swimming pools, fitness centers, picnic areas, and resident lounges.

Last month, Capital One provided $33.1 million in agency financing for Fairstead’s acquisition of Federation Sunrise, a multifamily property in Sunrise, Fla., as reported by CO. Meridian’s Drew Anderman and Alan Blank negotiated the debt.

The five-year, fixed-rate loan includes one five-year fixed or floating rate extension option as well as a single year of interest-only payments. The deal includes cash-out proceeds as well as flexible prepayment provisions that feature a lower fee upon a sale. 

Meridian Capital Group senior managing director Seth Grossman and senior vice president Sarah Kuebler arranged the financing on behalf of Blue Roc Premier Properties, which also manages the property.

“The term sheets were executed during the week of March 23. This was only days after the stock market bottomed, volatility and fear were at their peak and nearly all lenders were on the sidelines,” Grossman said in a prepared statement, adding that the lender stepped “at a critical time” to execute.

The portfolio includes 800 total units among The Park at Positano, The Park at Murano and The Park at Veneto at 2719 Colonial Boulevard, 4757 Barkley Circle and 3891 Solomon Boulevard, respectively. The residences feature one-, two- and three-bedroom floor plans with in-unit washers and dryers and patios and balconies. 

The complexes also sport amenities such as fitness centers, business centers and recreational offerings such as swimming pools and tennis courts. 

An official at NYCB was not able to provide a comment or additional information prior to publication.