Office-to-Residential Conversions

Here’s how the thinking goes: Far fewer companies and organizations want to rent space in older office buildings amid hybrid work schedules, so those office buildings’ owners will convert them to residential to wring revenue out of the properties. It’s much easier said than done — that’s been clear for a while. There are also other things holding back such a conversion wave. Just look at Lower Manhattan. Also, a $108 million nonperforming loan on a luxury building is up for sale. It won’t be the last.

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— Tom Acitelli, Co-Deputy Editor

Why Lower Manhattan’s Office-to-Residential Conversion Wave Might Sputter

All of the conversion projects underway in the Financial District right now are set to be as-of-right, market-rate rentals, because developers say there isn’t an incentive to include more affordable, below-market housing. The city and state created a tax abatement program for office-to-residential conversions in the mid-1990s, hoping to stem Lower Manhattan’s flood of empty office buildings. The program, known as 421g, offered landlords a significant tax break in the decade or so following an office-to-residential conversion. In exchange, they were supposed to give tenants rent-stabilized leases, though many owners were sued in recent years for failing to do so. During the decade the program was in effect, from 1995 to 2005, owners used the abatement to convert 13 million square feet of offices to 12,865 apartments, according to a recent Citizens Budget Commission report.

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Nonperforming $108M Loan on SoHo Properties’ 45 Park Place Up for Sale

The $108 million senior loan on Soho Properties’ luxury condo tower at 45 Park Place in Tribeca is being marketed for sale, Commercial Observer has learned. A Newmark team led by Dustin Stolly, Jordan Roeschlaub and Nick Scribani is leading the sale of the nonperforming debt. The 43-story building — which sits between Church Street and West Broadway — is currently under construction but nearing completion, after its development stalled in late 2019.

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