Charles Cohen Files For Midtown Office Conversion

Charles Cohen is facing a slew of threats to his real estate portfolio, but he still has time to plot a residential conversion of one of his office properties.

Cohen Brothers Realty filed an application this week to convert 623 Fifth Avenue in Midtown East, Crain’s reported. The application calls for the conversion of the 38-story office property’s upper floors into 172 condominium units.

The property was completed in 1988. Swiss Bank was one of the original tenants but left in 2006. Leasing has been a struggle for Cohen at the 499,000-square-foot property: It’s only 12 percent occupied today, according to Cohen’s application.

The Department of City Planning supports the conversion application, which estimates the project will take 18 months and wrap in 2026. It’s unclear how much it would cost.

Office tenants with leases stretching beyond 2026 would be relocated.

The office tower is connected to the landmarked Saks Fifth Avenue at 611 Fifth Avenue, a 10-story building the department store chain occupies in full. No changes would be made to that building, where Hudson Bay Company has proposed plopping a casino on top of the property.

The department store would keep the 10 floors it occupies at 623 Fifth Avenue. There would be more than 578,000 square feet of department store space between the two properties.

Cohen’s previous wishes to convert another Midtown property hit a snag after the owner of the land beneath it “arbitrarily and in bad faith refused,” according to Cohen. The claim came in an affidavit submitted last year in a legal battle with the owner of the land, who claimed Cohen had failed to pay rent on his ground lease at 135 East 57th Street.

“Any alleged default in paying net rent has resulted from landlord’s unreasonable refusal to consent to a conversion of the building to residential use,” Cohen explained in the legal filing.

The billionaire office landlord was hit this week with his second foreclosure filing in a matter of weeks after the special servicer of the debt backed by 750 Lexington Avenue came after him. Fortress Investment Group also recently moved to foreclose on the equity interests in a $548 million Cohen portfolio after he failed to make debt payments.

Cohen’s net worth is $3 billion, according to Forbes.

— Holden Walter-Warner