Following the near collapse of the Pfizer building conversion project last week, the industry has grappled with the potential impacts of the alarming structural failure.
Aside from the consequences for the project itself, such as construction delays and financing constraints, real estate players are also attempting to forecast the incident’s effect on other office-to-residential conversion bets in the city, as well as on the larger development landscape.
Though the fallout is still taking shape, many expect the aftermath to bring new regulations or heightened enforcement of existing rules, moves that city agencies and members of the New York City Council already appear to be discussing.
The construction breakdown at the East 42nd Street project could change how developers and owners view the empty airspace above office buildings targeted for conversion, according to developer Andrew Heiberger.
Developers MetroLoft and David Werner are adding 15 floors above the existing structure of the former Pfizer headquarters, the strain of which caused floors to sag and support columns to buckle on one side of the project.
An overbuild, as Heiberger calls it, is already considered a “known risk” for a conversion project, though not uncommon, given that it allows developers to add more apartments and collect additional rent. But it also costs more money and time, which factors into the complicated math of these projects.
For Heiberger and Marty Burger, his partner on an office-to-residential conversion in Midtown South, the numbers didn’t add up. Though they had roughly 40,000 square feet of air rights above the West 35th Street development site, adding more floors atop the aging building was more trouble than it was worth.
But Heiberger suspects that more developers may follow suit in the wake of the structural issues at the Pfizer conversion, especially if the city imposes additional hurdles and red tape on conversion projects, which could make them more expensive and time-consuming. Lenders, already cautious, could become increasingly more so for projects with significant additions planned.
That could lower the sale prices of prospective conversions that include unused air rights, which, by Heiberger’s estimation, have been a lucrative asset for owners of these buildings over the last year.
“When the seller of that property lists it for sale, these days, they’re baking in the extra air rights,” Heiberger said. “They want the developer to pay for it.”
But in a world ruled by more regulation and fear of future structural failures, the value of that extra space could drop significantly, Heiberger said.
“Existing owners of these conversion projects, I think, just lost all the value of their air rights,” Heiberger said, adding that he wouldn’t give them “anything” for them. “That’s a pretty strong statement, but I think that’s something that’s a reality right now.”
Not so fast…
After more than a year on and off the market, a Flatiron penthouse is headed for auction — but with proceeds from the sale marked for a conservation charity in Mozambique.
Bidding for the apartment atop the Sohmer Piano Building opened on Thursday, starting at $8.25 million, according to Concierge Auctions. It will close on July 29 as part of a two-day event at Sotheby’s New York celebrating the 250th anniversary of the U.S.
All earnings from the trade will go to the Gorongosa Project, a partnership between Mozambique’s government and the Carr Foundation, a non-profit founded by the apartment’s seller, Gregory Carr, aimed at preserving wildlife and communities in and around the Gorongosa National Park.
The duplex at 170 Fifth Avenue has come and gone from the market since November 2024, when Carr, a telecommunications entrepreneur-turned-philanthropist, listed it for $25 million. In the years since, Carr has slashed its asking price multiple times, ultimately reaching $14.9 million in January.
The renovated penthouse spans 4,900 square feet and has five bedrooms and four bathrooms. It also features oversized windows, an eat-in kitchen and roof deck with views of the Empire State Building and Madison Square Park.
Lawrence Treglia and Claire Groome with Sotheby’s International have the listing.
NYC Deal of the Week
The priciest deal to hit the city rolls this week was for a townhouse at 110 East 78th Street, which sold for $14.5 million.
The sellers, Edgewood Management portfolio manager Lawrence Creel and his wife, Dana Creel, purchased the home for just under $9 million in 2015 and sold it earlier this month to an anonymous trust in what appears to be an off-market deal.
The renovated property, built in 1899, spans more than 6,200 square feet and has five bedrooms and seven bathrooms, according to a Streeteasy listing from 2022.
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Residential
New York
Pfizer building’s column scare tests Midtown East’s biggest conversion bet
Construction
New York
Pfizer building inspector and subcontractor’s violations face scrutiny as probes proceed