The Factory in Long Island City has landed in special servicing, another sign of distress in New York’s outer-borough office market.
The $300 million loan tied to the 1.1 million-square-foot office property at 30-30 47th Avenue was sent to special servicing this month for “imminent maturity default,” according to Morningstar Credit. The debt comes due in October after several extensions.
The owners, a group led by Midtown-based Atlas Capital Group, were current on their payments through August, according to Morningstar. The loan had not previously been delinquent, but the building’s financials have steadily worsened. Operating expenses have climbed every year since the loan originated in 2020. At the same time, income has eroded.
Occupancy stood at just over 73 percent as of the second quarter. That’s down from 83 percent in 2020. The largest tenant, Macy’s marketing department, occupies 146,000 square feet across three floors, according to CoStar data. Other tenants include the New York City School Construction Authority, Tourneau and Polo Ralph Lauren. In 2025, Altas signed 150,000 square feet in new leases.
Under the loan agreement, the borrowers have already exercised three extension options. If they can’t secure new financing, the property could be at risk of default.
Originally built in 1926 as a Macy’s furniture warehouse, Atlas Capital, Invesco and Square Mile Capital Management acquired the property at a bankruptcy sale in 2012. They invested $100 million to redevelop it into creative office space with large floor plates, high ceilings and Class A amenities. In 2018, Partners Group invested in the complex by buying a portion of Square Mile’s stake in a deal that valued the property at $400 million.
In 2020, the owners secured a $300 million CMBS loan from Credit Suisse subsidiary Column Financial. In July, Moody’s downgraded the mortgage from AAA, to the equivalent of AA+, according to Crain’s.
A representative for Atlas Capital did not immediately respond to a request for comment. A spokesperson for Partners Group declined to comment.
While Manhattan’s trophy towers have led a recent wave of leasing activity, outer-borough landlords have struggled to land tenants. Long Island City’s availability rate hovered just below 27 percent in the first half of 2025, according to CBRE, compared to Manhattan’s overall availability rate of 17.5 percent.
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