Jeff Sutton, a prominent real estate investor, is facing another pre-foreclosure lawsuit involving his retail properties on West 34th Street in Herald Square. The suit targets the buildings at 27-29 West 34th Street, where Sutton is named as a defendant due to his role as guarantor on a $50 million loan linked to the property.
This marks the second foreclosure action against Sutton and Wharton Properties in recent months. In June, he was also named in a similar suit related to 15 West 34th Street. The area around Herald Square has experienced rising vacancies and declining rents.
German bank Helaba, the lender in this case, seeks to recover any remaining debt from Sutton after foreclosure. According to the bank’s complaint, the borrowing entity allegedly submitted false financial statements that concealed tax liabilities for the property and failed to enforce a master lease. Helaba argues these actions activate “bad boy” clauses in the guarantee agreement, which would make Sutton liable.
Court filings indicate that delinquent taxes on the properties exceeded $12 million as of April. The outstanding principal balance on the loan stands at $48.4 million, with annual property taxes around $1.8 million based on city records.
Sutton acquired these buildings in partnership with SL Green in 2006 for $30 million; the deal included an adjacent building and involved financing from SL Green for part of Sutton’s equity stake.
By 2016, Sutton had taken over paperwork responsibilities for ownership of the properties.
No. 29 was leased by footwear brand Geox under a 15-year agreement starting in 2007 but Geox filed for bankruptcy in 2021. At that time, base rent was $2.6 million per year and Geox agreed to pay Wharton Properties $8.8 million before vacating; it is now occupied by a souvenir shop expected to leave soon along with Superdry at No. 25.
Footwear retailer Aldo signed its own 15-year lease at No. 27 in 2009; by 2018, its annual rent reached $2.3 million according to court documents.
Retail interest has waned across Herald Square: average asking rents fell nearly ten percent year-over-year during early 2025 and are now at $447 per square foot—a drop of nearly sixty percent from their peak in 2015 (https://www.rebny.com/). Available storefronts increased from fourteen during early 2024 to twenty-one this year.
Major brands such as Gap, Victoria’s Secret, American Eagle, Uniqlo, and Zumiez have exited this corridor recently; Forever 21 moved off West 34th Street before closing all stores following bankruptcy (https://www.nytimes.com/2019/09/29/business/forever-21-bankruptcy.html).
Persistent vacancies combined with lower foot traffic may worsen conditions further; declining rents paired with high or rising property taxes complicate refinancing efforts for owners.
Dan Biederman, president of the 34th Street Partnership, noted differences between blocks: redevelopment efforts westward have helped some areas while others lag behind.
“Fifth to Sixth is generally up from the pandemic times,” Biederman said. “But it’s a varied group of owners and you never know when a retail site is going to go upwards in quality or downwards.”
There are positive signs: Old Navy signed a new lease at No. 50 earlier this year after moving from No. 150 (now Primark), signaling optimism about Herald Square’s prospects according to Richard Cohan, retail adviser for the partnership.
