A troubled 12-story tower between Fifth and Sixth avenues will be the first office building to be turned into apartments under new zoning in the area around Penn Station.
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Former Silverstein Properties CEO Marty Burger, former Town Residential CEO Andrew Heiberger and a capital partner have acquired 29 W. 35th St. with plans to turn the 85K SF building into 107 studio apartments, including affordable housing units renting at $1,701 a month.
“Rather than tearing these buildings down, we have an incredible opportunity to breathe new life into them as homes for New Yorkers,” Burger said in a statement. “This is a model example of adaptive re-use of an obsolete building in which we are creating much-needed housing.”
Burger's Infinite Global Real Estate Partners, Heiberger's Buttonwood Development and 400 Capital Management paid $25M for the building in July, according to city deed records. The West 35th Street property had been something of a poster child for distressed office buildings in Midtown South.
Tenants emptied out of the once-buzzy building during the pandemic, and LNR Partners, the special servicer acting on behalf of investors in the building's CMBS debt, foreclosed on the property last year in an auction with no bidders, The Real Deal reported at the time.
Allegiant Real Estate Capital and 400 Capital Management provided the project’s financing, with David Levinson of L&L Holding Co. and Terracotta Management joining as additional equity partners. Terms of the financing arrangement were undisclosed. L&L will also serve as the project manager.
LNR was represented by Colliers’ Zach Redding and Matt Mastrocola. Ariel Property Advisors’ Ben Schlegel represented the developers in the debt negotiations, while Richard Stanton repped Allegiant.
The development will be the first conversion under the Midtown South Mixed-Use Plan rezoning, which was approved by the city council in August and for the first time allows residential development between West 23rd and West 40th streets and between Fifth and Eighth avenues. It could yield as many as 9,500 new homes.
Burger, Heiberger and 400 Capital’s joint venture will also take advantage of 467-m, a program introduced last year that provides office-to-residential conversions with a 35-year tax abatement in exchange for keeping 25% of all units as affordable housing.
That overlaps with the Midtown South Mixed-Use rezoning, which requires the same percentage of units to be affordable housing to qualify for residential conversion.
“Midtown South is on the cusp of an incredible transformation, much like we saw in the Financial District, but with its own unique energy,” Heiberger said in a statement.
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