Watermark Capital Plots Office-to-Resi Play in Dumbo

Office-to-residential conversions are logical pitches in Manhattan, but Brooklyn has at least one property primed to make a switch.

Watermark Capital Group is embarking on a conversion of 175 Pearl Street in the borough’s Dumbo neighborhood, the Commercial Observer reported. The plans would expand the eight-story, 185,000-square-foot office into luxury housing.

News of the plans comes shortly after Wolfe Landau’s firm acquired the property from Cannon Hill Capital Partners for $66.5 million. BridgeCity Capital provided $50.6 million in acquisition financing.

Landau plans to convert the 1918-built property into a 14-story, 238-unit multifamily complex, which would span 230,000 square feet. The conversion doesn’t require a rezoning and is set to benefit from 467-M, a new state tax incentive that aids conversions by exempting developers from local property taxes, a BridgeCity analyst told Crain’s, adding that condos were still a possibility.

Tenants don’t pose much of an issue for Watermark; all of the building’s tenants have either vacated or will be doing so imminently, according to the BridgeCity analyst. Occupants have included Constangy, Brooks, Smith & Prophete, Thelab and coworking company Spaces, though it’s unclear who’s left.

Watermark did not respond to requests for comment from either outlet.

The property last traded hands in 2017 when a fund managed by Normandy Real Estate Partners purchased a majority stake in it for $100 million. The fund was spun out as part of Cannon Hill after PIMCO took Columbia Property Trust — which itself acquired Normandy — private in 2022.

Three months ago, Landau’s Watermark agreed to acquire Brooklyn’s Hanson Place Central United Methodist Church at 144 Saint Felix Street in Fort Greene for $15 million. Its plans were unclear at the time, but the site has more than 164,000 square feet of development rights.

— Holden Walter-Warner