Essex Crossing tower sent to special servicing

Essex Crossing was seen as a triumph of urban planning when the $1.9 billion development on the Lower East Side opened in 2019. The sprawling complex of new apartments, retail and office space, a 14-screen multiplex, and a new home for the historic Essex Market seemed poised to revitalize what had long been a vast no-man’s land. But all is not well with this mega-project seven years later. Developers have told lenders that they’ll be unable to pay off $215 million worth of debt secured by a 26-story residential tower in the development when the bill comes due imminently, according to Morningstar Credit Analytics. The debt has been sent to special servicing. “Net cash flow has been middling at best,” Morningstar said of the apartment building at 125 Delancey St., which also holds the project’s movie theater. Despite the financial turbulence, Morningstar still expects lenders will grant a loan extension to the site’s developers that include Taconic Partners, L&M Development Partners, BFC Partners, Prusik Group and Goldman Sachs. The Bloomberg administration selected the partnership in 2013 to develop Essex Crossing on nine city-owned sites that had been vacant since 1967. None of the developers had any comment by press time. Essex Crossing consists of more than 1,000 apartments, 350,000 square feet of office space and 300,000 square feet of retail that includes a Target and what was described as the largest Trader Joe’s on the east coast when it opened in 2019. The New York Times praised the project’s sensitivity to community needs and called it “the anti-Hudson Yards” at the time of its opening. It has encountered glitches since then, however. A 150,000-square-foot food hall in the basement closed two years ago, for instance. And part of its space was acquired last year by the Rosenkranz Foundation, which supports conservative think tanks such as the Manhattan Institute and Federalist Society. More than 40% of the office space is vacant at an Essex Crossing office tower at 145 Delancey St., according to CoStar. The tower at 125 Delancey may have run into financial turbulence because 98 of its 195 apartments are rent-stabilized, according to S&P Global. Rents are frozen at such properties for the next two years following the Rent Guidelines Board’s landmark and controversial June vote, even as costs for maintenance and insurance continue to rise. Owners of rent-regulated properties across the city have long said they are being squeezed by the same forces. Known as the Essex, 125 Delancey features 11-foot-high ceilings, oak floors and a rooftop farm. The property generated almost $14 million in revenue last year, according to Morningstar. It’s not clear how much regulated apartments rent for, but a one-bedroom market rate unit is available for about $10,000 a month, according to StreetEasy. Six units in the building are currently available, the site says.

By Aaron Elstein October 27, 2026, 02:34 PM EDT https://www.crainsnewyork.com/real-estate/commercial/cny-essex-crossing-tower-sent-to-special-servicing-20261027/