Silverstein, Metro Loft eye resi conversion of 55 Broad Street

Developers teamed up to buy office building for $180M

New York /
Jun.June 21, 2022 12:30 PM
55 Broad Street, Metro Loft Management's Nathan Berman, Silverstein Properties' Marty Bulger (Silverstein Properties, Loopnet)

55 Broad Street, Metro Loft Management’s Nathan Berman, Silverstein Properties’ Marty Burger (Silverstein Properties, Loopnet)

Silverstein Properties and Metro Loft Management have revealed their plans for 55 Broad Street: one of the largest office conversions since the beginning of the pandemic.

The developers are buying the Financial District building from Rudin Management in a deal reported last month. Rather than keeping the office property in place, however, the Wall Street Journal reported the developers plan on converting it into a residential building.

The 30-story building will be turned into 571 market-rate apartments, which will include layouts ranging from studios to three-bedroom apartments across the 425,000-square-foot property. The conversion is expected to take three to four years.

The Commercial Observer reported last month the landlords have inked a contract, but the closing date remains unclear.

Metro Loft founder Nathan Berman told the Journal that it was “the right evolution of these struggling, underperforming, older office assets that are approaching their obsolescence.”

The Rudin family developed the property in 1967, when it was intended to serve as the headquarters for Goldman Sachs, which left in 1983. Since then, the property Rudin chief technology officer and chief operating officer John Gilbert called the “godfather of smart buildings,” has boasted many financial services and technology tenants.

Rudin recently completed a renovation of the building that included a new lobby. Further changes will be needed for the conversion, though the developers told the Journal the property is well-suited to keep the conversion budget at a reasonable rate. Berman estimated the conversion would cost one third less than building a new apartment building there.

Office conversions have become increasingly of interest to developers and landlords as the office market has cratered during the pandemic. Older office buildings in particular are less attractive to office tenants than ever before as a flight to quality has left questions about the future of these older properties.

Berman has had decades converting office buildings. The developer previously told The Real Deal the only constraint on such projects is the “availability of light and fresh air,” along with the budget.

Several of the city’s largest commercial real estate landlords and brokers last month discussed the possibility of conversions at The Real Deal’s Real Estate Showcase + Forum. In a panel discussion on commercial offices, Bob Knakal of JLL Capital Markets called for a reenacting of the 421-g tax abatement, while Savanna Fund founder Chris Shlank noted “the bottom 20 [percent of office space] is going to be ripe for alternative use.”

[WSJ] — Holden Walter-Warner





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