Analysis of Flatiron Building Residential Conversion

Jeff Bezos stands on the roof, lording over Madison Square and sipping single malt. Sighing, he languorously takes a selfie with the Empire State Building in the background. His next skyscraper should have a better view of Hudson Yards. Or it should be somewhere that allows Amazon delivery drones.

“Bored now,” he says, as he retreats inside his new 22-story home.

This is, of course, a hypothetical — and an admittedly strange one based on zero interactions with the billionaire — in which Bezos has purchased the entire Flatiron Building as his personal residence.

Bizarre, yes, but not entirely without precedent. Consider Indian tycoon Mukesh Ambani, who built a 27-story, 400,000-square-foot residence for his family in Mumbai.

In New York, the idea of a residential compound for the ultra wealthy is indeed already playing out, albeit on a smaller scale. Bezos has amassed five units at 212 Fifth Avenue in NoMad for more than $119 million, and hedge funder Ken Griffin owns four floors plus two other units at 220 Central Park South on Billionaires’ Row. He dropped more than $240 million on the spread.

Sotheby’s International Realty’s Nikki Field referred to these assemblages as “vertical family compounds,” and thinks the city will see more of them. The Flatiron Building, historically dedicated to office use but now a vacant canvas, could be ripe for the taking.

Last week, a group led by Jeff Gural’s GFP Real Estate bid $161 million for the building, winning it at auction. The owners are now figuring out what to do with their prize.

“While we have not made a final determination yet, it is likely that we will convert at least half of the building to residential,” Gural said in a statement. “Our discussions are ongoing, but nothing is off the table.”

Field said the Flatiron would be a “golden opportunity,” for a hotel-branded condo building, akin to the Ritz-Carlton in NoMad, the Four Seasons at 30 Park Place in Tribeca or the Aman New York in Midtown.

“That’s where the money is; that is where the interest is,” she said.

In some ways, the building is primed for a major overhaul: It has sat vacant since 2019, when its only office tenant, Macmillan Publishers, left for the Equitable Building. So the owners do not have to wait or buy out any tenants.

The floors generally span 8,000 square feet, totaling roughly 180,000 rentable square feet. Architects and engineers interviewed for this story estimated that if converted to residential use, each floor would have, at most, four units, with two- or full-floor apartments on the top floors. The logical product, they said, would be luxury condos.

Neighboring condo towers provide a snapshot of the kind of pricing the Flatiron could fetch. At Related Companies’ One Madison, Rupert Murdoch paid $45 million, or roughly $6,400 per square foot, for a triplex unit on the 58th through 60th floors. He listed the 7,000-square-foot apartment for $62 million last year, but the price has since been cut several times, most recently asking $42 million.

The median listing price for all home types in the Flatiron District in April was $3.1 million, at $1,700 per square foot, according to Realtor.com. SLCE Architects’ James Davidson said he could see units in the Flatiron Building selling for between $4,000 and $6,000 per square foot, assuming the market strengthens by the time a conversion of the building is finished.

Zoning in the area, and the fact that the property was built before 1969, should make it fairly straightforward to get an office-to-residential conversion approved, though it will likely require some landmark-related reviews. If any of the space is dedicated to hotel rooms, the developers would need to obtain a special permit and go through the city’s monthslong land use review process.

The building is covered in windows — once an eyesore when many were filled with air conditioning units — and is separated from its surroundings by Fifth Avenue, 23rd Street, Broadway and 22nd Street. So it offers impressive, largely unobstructed views of Madison Square Park and the surrounding cityscape. On certain floors, even New Jersey is visible.

“You will never have a building built next to you because it’s the whole block, so those views are forever,” said Borys Hayda, managing principal of DeSimone Consulting Engineers, which worked on an earlier proposal to convert the Flatiron into co-working space.

What makes the 120-plus-year-old building special also presents some challenges: Its terracotta and limestone facade has been under scaffolding for years, and will require long-term maintenance. And the building’s triangular shape makes for some narrow and likely challenging room layouts.

“On paper, at first glance, it does not appear ideal,” said Robert Fuller, studio director at Gensler’s New York office. But he thinks the building’s history and cachet will make up for any awkward interior spaces. “I think it would be a very sought after address.”

The building has more elevators than it would need for residential use, so that space could be reallocated, Davidson said. The building would also require more bathrooms because it currently has a shared facility on each floor.

“To my eye, it is a relatively small building and a relatively small floorplate, and mixing uses may not be best for the building,” Davidson said.

Jay Neveloff, real estate chair at the law firm Kramer Levin, thinks the building has room for two separate lobbies — key for any mixed-use condo building — one that fronts Fifth Avenue, and the other on Broadway.

“It is an absolutely ideal location,” Neveloff said. “And it’s near Shake Shack, and how much better can you get than that?”

When asked about the possibility of turning the building into a pre-war castle, Field, who represented developer Madison Equities on the 212 Fifth Avenue deals, said it was far-fetched. Still, she briefly entertained the idea of someone like Bezos buying the building outright.

“Maybe I should call him,” she joked.