The developer of the half-empty speculative office tower 11 Times Square has filed documents related to dividing the sleek 40-story tower into two condominium units, records on the city’s Department of Buildings website show.
Developer Steven Pozycki’s New Jersey-based firm SJP Properties built the 1.1 million-square-foot tower between 41st and 42nd streets at 640 Eighth Avenue, which officially opened one year ago this month.
Documents concerning the creation of two condo units for the building, “have been filed with the [New York City] Department of Finance Division of Records – Tax Map Unit,” the filing on the DOB website dated Dec. 15 says. Converting the property to condos should not have an impact on tenants, who generally have leases that are not dependent on whom the owner is, real estate professionals said.
SJP Properties’ 11 Times Square has been a difficult reminder of the economic downturn. Even as formerly over-leveraged properties like Worldwide Plaza at 825 Eighth Avenue have leased up, 11 Times Square remains mostly empty. Yet Pozycki, who took a risk by beginning construction without a tenant, has held on as owner.
Creating a condominium gives the owner the option to sell a portion of the asset.
“It affords the sponsor or owner to cash out some portion of the asset without liquidating the entire holding of the asset,” said Jacob Klein, president of New Jersey-based Klein Group, which specialized in retail assets.
Last November, a joint venture including Crown Acquisitions and Ashkenazy Acquisition divided the Knickerbocker Hotel at 1466 Broadway into retail and office condos.
An SJP spokesperson said the company declined to comment. DOB and the city Department of Finance did not respond to requests for comment on the filing.
Despite inking a 406,000-square-foot deal with its biggest tenant, law firm Proskauer Rose in 2010, the building has not signed a major lease since then. And leasing agent CBRE Group was replaced last year by a team from Jones Lang LaSalle.
In addition, the entire 55,000 square feet of retail at the building that is being marketed by Robert K. Futterman & Associates remains empty.
It was not known if SJP was dividing the building into a retail condo and office condo, or some other configuration, but insiders said that was the most likely division.
Ron Sernau, a partner and co-chairman of the real estate department at Proskauer, was not familiar with the current condo plans, but said such plans were discussed for the building in the past.
He said when the law firm was negotiating with SJP about taking space in the building, Proskauer was told there was the possibility that the building would be divided into condo units.
“We talked about them converting into a condo,” Sernau said, during lease discussions. He added that dividing the building would have no impact on the office portion. “It is a separate component and has nothing to do with us.”