The website for 56 North Moore Street, a former Tribeca parking lot slotted for new office space, shows renderings of a Class A, light-filled concept built on century-old bones and flanked by three-stories of terrace space.
Navigate to the brokerage Avison Young’s site and the project’s nine floors are listed as immediately available to lease.
But the project’s developer, Nathan Berman’s Metro Loft, may be rethinking plans for the space, a pivot that would come as New York’s office market is in the throes of an existential crisis.
Metro Loft may instead be eyeing a luxury condo project, a source informed The Real Deal.
The firm hadn’t ruled out a residential use, as the developer was still considering all options, according to a spokesperson from Metro Loft. The firm has also yet to close on the site, the spokesperson added, which is still owned by the Calicchio family, private Tribeca-based investors.
A deal should be finalized in the next few months, according to the spokesperson.
It’s good to be king
Luxury residential could be seen as a sharp turn from Class A office, but the shift is certainly in Berman’s wheelhouse.
The developer earned his nickname — the “King of FiDi” — by converting downtown office space into residential in the late ‘90s.
In the third year of the pandemic, Berman has jumped on conversion opportunities in the Financial District, teaming with Silverstein Properties to revamp 55 Broad Street and GFP Real Estate and Rockwood Capital to transform 25 Water Street.
And if luxury condos are the end goal, the market dynamics make sense.
Since 421a expired, residential developers have all but shunned market-rate multifamily projects, which the tax abatement supported. Firms have instead turned to luxury rentals or condominiums, which move at high enough prices for the projects to pencil out.
A sign of the times
Meanwhile, new office leases, battered by the pandemic, fell off a cliff in the fourth quarter, a blow to any developers or office landlords hoping a snapback in demand might be underway.
Commercial tenants leased 43 percent less space in the last three months of 2022 compared to the same period last year and 47 percent less than in the third quarter, according to Colliers.
This comes as some developers have put a pin in planned office projects, deterred by faltering demand amid rising construction costs, interest rates and turbulence in the tech and financial industries
The firms moving forward with office — the RXR-TF Cornerstone team on 175 Park Ave, for example — are banking that quality space near transportation hubs and will carry enough amenities and pizazz to pull in new tenants.
Plans for 56 North Moore, drawn up over two years ago, aims for that allure. The projects’ site bills it as a “trophy redevelopment”, “a singular oasis, in a prestigious location.”
But even firms behind top-tier projects have cast doubts on the market.
Vornado Realty Trust and Rudin revealed plans for a tower at 350 Park Avenue in 2019. But in the third quarter of 2022, Vornado CEO Steve Roth conceded that headwinds in the current environment were “not at all conducive to ground-up development.”
Still, the firm said it is still fully committed to building towers in the area surrounding Penn Station.
Talks appear to still be in early stages on whether Metro Loft will opt to shift direction.
And when asked if luxury condos were in the works for 56 North Moore, an Avison Young agent on the project said a residential building was not the development plan for the site.
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Who’s crazy enough to build office?