New York City is facing a housing crisis now more than ever. There may be some relief in sight. There has been a growing trend of office to residential conversion, with some gutsy NYC developers taking on projects.
According to Jesse Schmidt, Senior Vice President of Sales at The Guarantor, ( a company servicing operators and renters) “We have been seeing this trend develop for years, the pandemic really accelerated the pace and made it a necessity for a lot of office owners to look for alternative ways to market their properties”.
According to recent research from the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC), the U.S. Needs to build 4.3M more apartments by 2035 to meet demand for rental housing.
Office conversions are being fueled by office vacancies near all time highs and a persistent shortage of housing.
Developers across the U.S. Are watching 25 Water Street in downtown New York City. This 1.1M square foot building represents the largest office to residential conversion in the country. If it succeeds, it could very well throw the doors open wide for other developers to follow.
Metro Loft Management is handling this landmark office to residential conversion project. They have partnered with GFP Real Estate to acquire the 22 story building. Work has begun gutting the interior and the plan calls for an addition of 10 floors for a total of 1,300 residential units.
These conversions are very complex projects and Metro Loft has seen great success over the past 25 years and has handled 5M square feet of conversions.
Schmidt of The Guarantors says “Metro Loft is one of the most prominent developers in the New York area that has successfully converted office buildings to residential”.
Metro Loft is also partnering with Silverstein Properties on the acquisition of 55 Broad Street, also in downtown NYC, with plans to convert the building to a 571 unit residential project.
According to Mitchell Wasser, Chief Marketing Officer at Metro Loft “ I would expect the amount of phone calls we're already getting to double and triple within the next 6 months, because there is going to be a lot more distressed assets in the B and C class office buildings”. Wasser also sees changes coming in zoning and building codes that will facilitate conversion projects as the cities and states see they need help finding solutions to fill empty buildings and optimize property taxes.
The Guarantor provides lease guarantees, security deposit replacements and renter's insurance products that help operators to accelerate lease ups by as much as 30%. Schmidt says “This is extremely helpful to developers in stabilizing their properties while protecting their income and assets”.
To be continued...
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