A Super-Tall Laid Low

Stalled Tower at 125 Greenwich Street May Be Headed to Foreclosure

The 88-story building, where construction work has stalled due to financial setbacks, is slated to house more than 270 apartments.

The troubled residential tower at 125 Greenwich Street (near the corner of Thames Street) may be facing foreclosure by lenders who say the development team has defaulted on the terms of several mortgages.

In May, work stopped on the building (which topped out at 912 feet, or 88 stories, last year) when multiple construction contractors filed liens against the developers for some $40 million in unpaid fees. This prompted several creditors — most prominently, the United Overseas Bank — to file notice with New York courts that they are owed $199 million in mortgage payments. The bank’s overall loan to the developers of 125 Greenwich is more than $450 million, and it is only one of half a dozen creditors.

Much of this discord appears to stem from a slowing market for condominium apartments in Lower Manhattan, where ample supply (generated by the conversion, in recent years, of dozens of former office buildings to residential use) has led to slack demand and falling prices.

The 125 Greenwich development team estimates the project’s total worth (with more than 250 apartments, and some 13,000 square feet of retail space at its base) to be somewhere between $850 million and $1 billion, but realizing such a valuation may prove to be an elusive goal. And with fixed costs and debt topping out at more than $800 million, the margin for error on such a project is slim.

The new residential tower at 125 Greenwich Street soars more than 900 feet into the sky, but has a troubled history that may prove insurmountable as demand for condominiums in Lower Manhattan softens.

These astronomical costs were a remote prospect in 2012, when another team of developers (a partnership consisting of the Witkoff Group and Fisher Brothers) purchased the property for $87.5 million. Although they originally planned to erect a residential tower of their own on the 9,000-square-foot site (initially planned to be as tall as 1,400 feet), they decided instead to accept an offer of $180 million from the current development team (a partnership originally led by builder Michael Shvo, who subsequently left the project) in 2014.

Before the previous owners bought the site, 125 Greenwich was home to a ten-story Romanesque revival building that housed Western Electric, the manufacturing arm of American Telephone & Telegraph, which used the building as a factory to build telephone equipment. This building was opened in 1889. Although local leaders tried in 2012 to persuade the City’s Landmarks Preservation Commission to grant the structure protected status, it was demolished the following year.

A foreclosure auction is currently scheduled for mid-August, but the developers are reported to be scrambling to put together a new package of debt and investment that would stave off such a development.