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GFP Snatches $288M for Office-to-Resi Conversion in Lower Manhattan

GFP Real Estate has secured $288 million to work on transforming an office property in lower Manhattan into a multifamily building, following a trend in New York as housing becomes out of reach for many.

The asset, known as 222 Broadway, has plans to be converted into 800 apartments, according to the Commercial Observer, which said the developer along with joint venture partner TPG filed an initial application for the project over the summer with the city. The two teamed up to purchase the 770,416-square-foot office property for $150 million in June.

Newmark arranged the construction financing for the conversation, while BDT & MSD Partners issued the loan.

In particular, Vanbarton Group has been active with office-to-resi conversions in New York. In the fall 2024, it purchased two office properties — with intentions to convert them into residential assets. One of them was acquired for $100 million — 1011 First Avenue in Manhattan, which at the time served as Archdiocese of New York's headquarters and featured 20 stories. The other, called 77 Water St, was purchased by Vanbarton for $95 million. Both deals were reported by Bloomberg.

In addition, Extell Development in December proposed to transform a Midtown Manhattan office building, 655 Madison Avenue, into a multi-use residential space after acquiring the site for $160 million, The Real Deal reported.

But this trend isn't just happening in New York, as office has generally been in less demand nationally since the pandemic started with residential emerging as a big need for consumers. CBRE said in a report that it expected office conversion projects to double in 2024 compared with 2023. A fourth-quarter report from ATTOM revealed that affordability has declined in 98% of the U.S. counties, as wage growth fails to keep up with home prices.

Reprinted with permission from the Tuesday, 21 January 2025 06:10:38 EST online edition of GlobeSt © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.