New-York News

Flatiron owner buying downtown office building at steep discount for resi conversion

The real estate firm planning to bring condos to the Flatiron Building is scooping up a downtown office property at a huge discount for another planned residential conversion.

Jeff Gural’s GFP Real Estate is in contract to purchase 222 Broadway for $150 million, according to a source familiar with the deal. This is far less than the $502 million DWS, the asset manager for Deutsche Bank, paid for it in 2014, another sign of the city’s relatively weak office market.

A Newmark team led by Doug Harmon and Adam Spies brokered the deal.

Gural did not respond to a request for comment by press time. Representatives for DWS and Newmark declined to comment.The Real Deal was the first to report the news.

The building 222 Broadway, located near City Hall between Fulton and Ann streets, stands 27 stories tall and spans roughly 800,000 square feet, according to the commercial real estate database CoStar. It was built in 1961 and renovated in 2011, and it is currently just 40.4% leased, CoStar says.

Dealing with New York’s housing shortage and office surplus through office-to-residential conversions emerged as a trendy idea almost as soon as the pandemic hit roughly four years ago. Although actually carrying out these projects remains complex and expensive, GFP has embraced the idea.

In addition to the Midtown-based company’s plan for 222 Broadway, the firm also intends to convert the Flatiron Building into a luxury condo property through a partnership with the Brodsky Organization and Sorgente Group. A group led by GFP won an auction for the famed property with a $161 million bid in May following a bizarre saga in which the winning bidder of a prior auction never put down his deposit.

GFP has also partnered with Metro Loft Management to convert Lower Manhattan’s 25 Water St., a former home to JPMorgan Chase, into more than 1,000 apartments.

Lower Manhattan’s office market has been struggling even compared to its Midtown and Midtown South counterparts. The neighborhood had a record-high availability rate of 21.7% in February, according to Colliers. It previously saw a wave of office-to-residential conversions following a 1995 incentive program the state enacted.

Other neighborhood conversions include Vanbarton Group’s 588-unit luxury apartment project at 160 Water St., known as Pearl House, and Metro Loft and Silverstein Properties’ 571-unit apartment project at 55 Broad St.

Eddie Small , 2024-03-13 15:46:27

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