Jeff Sutton’s Soho retail condo was just dealt a staggering valuation hit.
The retail portion of 599 Broadway was reappraised at $32 million, according to Morningstar Credit. That’s an 80 percent decline from the property’s 2018 valuation of $150 million.
The sharp drop comes as the property faces mounting distress. A trustee representing CMBS bondholders sued Tuesday to foreclose on the mortgage, alleging the landlords stopped making debt payments in January.
The debt traces back to a $75 million commercial mortgage-backed securities loan tied to the retail condo spanning the basement and first three floors of the 12-story building. The loan, held by building owner David Topping and two partners, transferred to special servicing in January. Topping did not immediately respond to a request for comment.
Adding to the pressure, an entity tied to Sutton’s Wharton Properties stopped making rent payments late last year, according to Morningstar. Sutton controls the lower levels of the building through a 49-year lease signed in 2008 with building owner David Topping in a deal reported to be valued at nearly $500 million.
The property also lost its anchor tenant last year. In December 2009, Sutton inked a $120 million lease for the bulk of the building’s 42,000 square feet of retail space with American Eagle. But the retailer vacated its 30,000-square-foot space in July 2025 when its 15-year sublease expired.
Sutton has proposed a modification that is being evaluated by a special servicer, according to Morningstar. He did not immediately respond to a request for comment.
The retail space, at the northern edge of Soho, could forge a path to recovery as retail momentum steadily rebuilds. While economic uncertainty kept some retailers on the sidelines in the first half of 2025, many returned to the market in the second half of the year, according to a retail report by the Real Estate Board of New York.
Competition for quality space in Soho is as intense as ever, with only a handful of storefronts available and median asking rents along the Broadway corridor reaching $750 per square foot, 12 percent below the all-time peak of $850 in 2017, per REBNY.
Things turned around for the office portion of the building, once anchored by WeWork. After its $20 million loan was watchlisted in 2024, the property traded in 2025 for $21.7 million, fetching more than the outstanding loan balance and avoiding losses for bondholders, according to Morningstar.
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