The Real Deal New York

The McGraw-Hill Building’s top half to receive resi conversion

Deco Tower Associates plans overhaul of 662K sf office tower above bus terminal
By Mark Maurer | June 27, 2018 12:35PM

330 West 42nd Street (Credit: Newmark Knight Frank)

The owner of the landmarked McGraw-Hill Building on West 42nd Street is planning a residential conversion of the office tower’s upper half, The Real Deal has learned.

Deco Tower Associates has proposed a major redevelopment of the 35-story, 662,000-square-foot tower at 330 West 42nd Street, which sits just above part of the Port Authority Bus Terminal. Plans call for a conversion of floors 16 through 34 from office space to Art Deco-style luxury rental apartments, according to an offering memorandum obtained by TRD.

The firm plans to secure approval for the proposed adaptive reuse by this fall and receive Department of Buildings approval by fall 2019. The conversion would begin by January 2020, the documents from Newmark Knight Frank show.

During that time, a subsidiary of the large labor union Service Employees International Union will be finishing up its lease for about 520,000 square feet. That lease expires in October 2020, at which time Deco Tower will not renew any other leases at the building. The union pays rent in the low $60s per square foot, according to the documents.

Although the project is a couple years away, the developer is already in the market for a $110 million bridge loan, equating to roughly 25 percent of the building’s current value of $450 million. Newmark Knight Frank’s Dustin Stolly, Jordan Roeschlaub, Nick Scribani and Chris Kramer are handling the debt search.

Deco Tower, an investment and management firm, bought the building in 1994, and it appears to have remained its only asset. Alex Schwartz — an investor who manages several Philadelphia properties through the entity ASI Management — is the managing member of the McGraw-Hill’s ownership, which also includes Panama-based entity Rozzi Business and Belize-based entity Massira Properties, the documents show.

More than $30 million has been invested in the property since 2012, including a $20 million restoration of the façade over the past five years. The documents say the façade makeover “alleviates the struggles with redeveloping a ‘landmarked’ building because the façade and existing building entrances remain the same.”

A representative for Deco Tower could not be reached, and the brokers declined to comment.

Education publisher McGraw-Hill Education commissioned the property to be built in the early 1930s. The company occupied it until 1972. The property, located between Eighth and Ninth avenues, was declared a national historic landmark in 1989.

The property is not to be confused with Rockefeller Group’s former McGraw-Hill building at 1221 Sixth Avenue in Midtown. In May, the publisher signed a lease for 130,000 square feet at Paramount Group’s 1325 Sixth Avenue.

Office-to-residential conversions occur infrequently in the city, though Harry Macklowe is currently attempting it at 1 Wall Street, and Metro Loft Management is nearly done with its effort at 20 Broad Street.