Parkchester Commercial Property Sees 37% Valuation Slash

Even in a planned community, things don’t always go as planned.

The commercial property that’s part of the Parkchester planned community in the Bronx has seen its valuation slashed from $112 million to $71 million — a 37 percent haircut, according to Morningstar Credit.

Similar to Manhattan’s Stuyvesant Town, Parkchester is a planned community with towers spanning 129 acres. The complex contains nearly 12,300 apartments and lends its name to the surrounding neighborhood.

The dozen two-story office and retail buildings making up the Parkchester Commercial Property are controlled by the Parkchester Preservation Company, which took over as sponsor of the development in 1998. The buildings total 541,700 square feet.

The Parkchester Preservation Co. took out $65 million on the property in 2015. But things started going poorly after a rise in real estate taxes. From 2017 to 2019, property taxes increased by $516,000 per year on the buildings, according to Morningstar Credit, a nearly 16 percent rise.

Then, occupancy fell. In 2022, the space was 90 percent full. Two years later that number fell to 77 percent. Rents were about $32 per square foot, according to Morningstar. Income fell by $439,700.

The loan went into special servicing in March of this year after missing its maturity deadline. The borrower is now looking for takeout financing, according to its servicer, or a forbearance or extension on the loan.

The net operating income is no longer enough to cover debt service on the loan. As of earlier this year, it covered only 38 percent of the annual debt obligations.

Macy’s is the biggest tenant in the space, taking up 170,800 square feet. Marshalls, the U.S. Postal Service, PureFitness and Santander Bank also occupy the property. The earliest lease expiration is 2028. The property also includes nearly 2,000 parking spaces in three garages.

The property was built in 1940 — when the Metropolitan Life Insurance company was first constructing the neighborhood. Macy’s started renting its space in the complex just a year later.

O’Connor Capital Partners and Olshan Properties are part of Parkchester Preservation Company and control the complex’s retail property, according to the Parkchester and O’Connor websites. Neither could immediately be reached for comment.