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Empty Wall Street Offices to Be Revived as Apartments

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Two New York developer ventures have purchased a one-third empty office building in New York’s financial district. Plan to turn it into an apartmentOne of the largest such conversion schemes initiated during a pandemic.

The venture, including Silverstein Properties and Metroloft, will pay $ 180 million for a 30-story building that opened in 1967 and has housed numerous technology and financial services tenants for decades. I agreed. The new owner plans to convert from a studio to a three-bedroom 571 market-priced apartment in the next three to four years.

Nathan Berman, founder and managing principal of Metroloft, said:

This deal has a trend of working from home that became popular during the pandemic. Soaring vacancies in the office market Whole country.Companies adopting a hybrid workplace strategy have less space Transition to a new building with a modern designGood location and abundant facilities.

Developers who purchased 55 Broad say the building is designed to make home renovations economically feasible.


Photo:

Rebecca Pitch Otto / The Wall Street Journal

In 2020 and 2021, office renovations created a total of more than 13,000 apartments nationwide, especially in cities such as Arlington, Virginia, Washington and Chicago, according to a report from Rent Cafe, a national apartment search website. rice field.

In many cities, elected officials and landlords are looking at the possibility of transforming dilapidated malls into residential spaces, returning vibrancy to office districts and alleviating housing shortages.

However, these projects carry financial, political and structural challenges. As a starting point, many office buildings, especially those built over the last 50 years, tend to have large floors and do not function well as a living space. Zoning restrictions in many cities increase conversion costs by demanding the needs of windows, gardens and other housing.

According to analyst Jeffrey Hubsey, office pricing needs to be 25% to 50% lower than it is today in order to have more than a slight impact on home production and commercial real estate use.

Moody’s

A person who tracks commercial real estate. The conversion from offices to housing “A.) does not solve the housing crisis, or B.) it becomes a dramatic trend enough to make a big difference in our city,” he said.

Developers who purchased 55 Broad feel that the building is designed so that home renovations are economically feasible. Berman said developers could take advantage of “business tips” such as carving a courtyard or installing a light shaft in the interior space, if needed.

“There are few obstacles we can’t overcome,” he said.

Berman estimates that converting 55 Broad will cost about one-third more than building a new apartment on the premises. According to the developers, the conversion is more environmentally friendly than building a new building because it reuses steel and other materials that are part of the existing structure.

However, 55Broad projects cannot be duplicated everywhere. New York’s zoning law is more generous than the rest of the city when it comes to downtown buildings built before 1977.

“There is a misunderstanding that old office buildings will automatically turn into apartments,” said Marty Burger, CEO of Silverstein Properties, best known as one of the world’s leading developers. Says. “But not all buildings are made the same.”

Recently, both city and state-wide policymakers have considered legislative changes to facilitate the conversion of homes throughout New York. Governor Kathy Hokul proposed a zoning change this year that was not approved by the Legislature.

City and state officials continue to investigate this issue. “New York City is on the verge of housing crisis and there is an urgent need for affordable housing, so cities and states need to consider every option to make it happen,” said Stroock & Stroock & Lavan. Ashley Doukas, a real estate lawyer, said. LLP.

Write to Rebecca Picciotto at [email protected]

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