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New York

Midtown building to pivot with office condo conversion

32 West 39th Street ducked possible foreclosure last year

R&B Realty Group's Aron Rosenberg (R&B Realty Group, Rudder Property Group)
R&B Realty Group's Aron Rosenberg (R&B Realty Group, Rudder Property Group)

A Midtown office building is trying to leave its tough times in the past with an upcoming conversion project.

The office building at 32 West 39th Street is set to be converted to office condominiums for sale. Rudder Property Group announced it will be responsible for the sales and marketing of the 16-story property, which is owned by Aron Rosenberg’s 32 W 39th Street Sole Member LLC.

The area “has seen a lot of interest from major office tenants” following Amazon’s $1.15 billion purchase of the Lord & Taylor building from WeWork in March 2020, said Michael Rudder, principal of the eponymous company.

The 87,000-square-foot office building, constructed in 1925, sits one block south of Bryant Park. Potential buyers will have their pick of floor plans ranging from 3,970 to 8,371 square feet. Offices can also be combined to create a singular space as large as 70,000 square feet.

The property was recently renovated to restore the facade and upgrade both the lobby and the elevators.

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Rosenberg has owned the building since 2004. Sales are expected to launch in the second quarter.

The conversion marks a new chapter for the Midtown building, which was saved from potential foreclosure early in 2021 when Ladder Capital provided Rosenberg’s R&B Realty Group, the landlord, slightly under $51 million to pay off loans at two separate office buildings.

The buildings were the subject of a lawsuit in February 2021, when the landlord filed to stop Maverick Real Estate Partners from foreclosing on them. R&B sought to refinance its debt with a new lender, claiming Maverick was “charging a default interest of 24 percent on each of the loans, and seems intent to…acquire the buildings on the cheap.”

Time will tell if the conversion to condos will make a difference in Manhattan’s embattled office market. The vacancy rate climbed to 17.3 percent in the fourth quarter, up by 21 percent year-over-year. But leasing activity soared 60 percent in the third quarter and ended the year at more than twice the pace of 2020’s fourth quarter.

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Commercial Real EstateDevelopmentManhattan Office MarketMidtown