A historic Chelsea office tower anchored by Google is facing what a credit monitoring firm calls a potential imminent default, even though the building is nearly 90% leased. The 11-story, roughly 635,000-square-foot property at 85 Tenth Avenue carries $625 million in debt that comes due in December 2026, and Morningstar Credit has flagged the loan as at risk despite strong occupancy and a marquee tenant roster.
The mortgage on 85 Tenth Avenue was transferred to special servicing over cash flow concerns, according to a Morningstar credit alert cited by Bisnow. Morningstar analyst David Putro said the transfer likely resulted from the loan's approaching maturity combined with lower-than-expected cash flow at the property, which is jointly owned by Vornado Realty Trust and Related Companies. The building's cash flow came in 28% below the level projected a year earlier, per Morningstar's assessment relayed in the Bisnow report.
Despite the distress signals, the building itself is far from empty. It was 89.9% occupied as of Vornado's second-quarter report, and its debt carries a weighted average interest rate of 4.55%, according to a Vornado release cited in the same report. Putro told Bisnow he expects the property could be modified and extended relatively easily, and that the owners likely will not need to contribute large sums of new equity to secure fresh debt.
A Debt Stack Built for a Different Market
The $625 million debt load traces back to a 2016 refinancing tied to a Deutsche Bank loan, the same transaction through which Vornado acquired a 49.9% stake in the property. That debt stack today includes a $396 million senior mortgage alongside $229 million in mezzanine notes, according to the Bisnow report. Vornado and Related had already moved once to manage the load: in September 2024, the joint venture partners modified terms on the mezzanine debt to defer interest payments on the $229 million in notes until the loan's December 2026 maturity, according to a Vornado fourth-quarter financial results release.
Warning signs had surfaced even earlier. S&P Global lowered its ratings on five classes of commercial mortgage pass-through certificates tied to the 85 Tenth Avenue mortgage trust in February 2024, citing declining net cash flows and concern that anchor tenant Google could downsize or vacate, according to S&P Global. Related had originally acquired the 1913-built property from Somerset Partners for $430 million in 2007, per the Bisnow report.
Google's Deepening Roots in the Building
Google first leased space at 85 Tenth Avenue in 2014, taking 180,000 square feet at a net effective rent under $77 per square foot, before expanding over the following decade to its current 300,000-square-foot footprint, as reported by Commercial Observer. Google renewed that 300,000-square-foot lease in 2024, and the tech giant now occupies close to half the building. Asking rents on the Google lease reached $100 per square foot, per the Bisnow report.
Google's footprint at 85 Tenth Avenue connects directly to its broader Chelsea campus. The company expanded into the neighborhood in March 2018 by acquiring the adjacent Chelsea Market complex at 75 Ninth Avenue for $2.4 billion, a property linked to 85 Tenth Avenue by an enclosed skybridge, per Commercial Observer. Both buildings originated from the same industrial complex: 85 Tenth Avenue was built in 1913 as part of the National Biscuit Company factory where the Oreo cookie was created in 1912, before Nabisco ended its Manhattan manufacturing operations in 1958, according to 6sqft.
Other Tenants and a Free-Rent Drag
Beyond Google, the identity verification company Clear leased 119,000 square feet at 85 Tenth Avenue in 2021 and is still in its free rent period, according to Morningstar's assessment in the Bisnow report — a factor weighing on the building's current cash flow. E-commerce platform Shopify also signed on, taking nearly 36,000 square feet on the eighth floor in October 2023 with asking rents exceeding $100 per square foot, as Shopify relocated from SoHo to join the West Chelsea tech corridor, per Commercial Observer. The building has had other institutional tenants over the years: General Services Administration records show the FBI's Joint Terrorism Task Force previously occupied space at the property before federal officials consolidated operations at One World Trade Center. The property also houses the Telehouse Chelsea Center, a carrier-neutral data center hosting the New York International Internet Exchange, according to Baxtel.
A Broader Chelsea Vacancy Problem
The building's troubles sit against a mixed backdrop for the neighborhood. Chelsea posted a 26.8% vacancy rate as of the second quarter, the second-highest in Manhattan, according to Cushman & Wakefield figures cited in the Bisnow report. That's despite overall Manhattan office vacancy falling to 19.3% in the second quarter from 22.6% a year earlier, per the same Cushman & Wakefield data. Vornado declined to comment for the Bisnow report, while Related and loan servicer Situs Holdings did not immediately respond to requests for comment.
The distress at 85 Tenth Avenue is part of a wider pattern for Vornado, which Hoodline has tracked across several recent Manhattan deals, including its 49% stake grab at Park Avenue Plaza. Analysts nonetheless point to a broader tech leasing rebound as reason for cautious optimism about a resolution: Manhattan tech and media office leasing reached 2.8 million square feet in the fourth quarter of 2025, its highest quarterly total since late 2019, according to Newmark Research. Whether that recovery is enough to reshape the terms of the loan before its December 2026 maturity remains to be seen.
