RXR Considering 2 NYC Office Buildings It Owns For Residential Conversion
RXR Realty is considering converting two of its office properties into housing as part of a review it is conducting to assess the best use for pieces of its extensive New York portfolio.
The 33-story office building at 61 Broadway in the Financial District could be converted to housing, Crain’s New York Business reports. The Financial District building, which spans 753K SF, is over 100 years old and has 16 vacancies. The office vacancy rate downtown is over 20%.
A prewar factory building RXR owns at 47 Hall St. in Brooklyn may also be a candidate for conversion.
The buildings are being evaluated as part of what RXR is calling “Project Kodak” – in homage to the former famed photography company. RXR CEO Scott Rechler told Crain’s the company is assessing each building in its property and marking them as either “digital” or “film."
“I said to my team, ‘Let’s be intellectually honest with ourselves,’” he said.“‘What are alternatives we should pursue relative to these film buildings?’”
Rechler noted if lenders won’t restructure loans on buildings that are facing high office vacancy — and if the Project Kodak review determines they aren't worth putting in new equity — he would be forced to hand over some properties to their lenders. He declined to identify any of those buildings.
“If you want to put new money in, you need to reset the deck to do so,” he said. “And if we can’t, we may have to hand back the keys.”
Conversions have been floated as a possible answer to the city’s oversupply of obsolete office buildings and undersupply of housing, while several proposed in Lower Manhattan comprising thousands of possible units.
But many say there are significant obstacles that would prevent those conversations happening en masse.
The city’s Office Adaptive Reuse Task Force released a report last month with 11 concrete recommendations to make changes to state laws and city zoning requirements to open up more space that is eligible for conversion. The task force also lays out a case for incentives for developers to take on these projects.
Last week, Mayor Eric Adams proposed rezoning a large part of Midtown to allow for buildings to be used as housing. But even with adapted rezoning and incentives, many buildings are not contenders unless they are totally empty — which is not the case with many buildings that would otherwise be a good candidate for conversion.