The Empire State Development Board of Directors has approved an amendment that gives the go-ahead for 5 Times Square to be converted to residential use.
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Under the change to the 42nd Street Development General Project Plan, Apollo Global Management, SL Green and RXR plan to transform the 1.1M SF office tower into 1,250 rental units, 313 of which would be permanently affordable.
“Confronting a decades-long housing crisis requires creating new housing in every neighborhood at an accelerated pace — even here at the ‘Crossroad of the World’ in Times Square,” Mayor Eric Adams said in a statement announcing the amendment.
The project will participate in the city’s Office Conversion Accelerator, and it will capitalize on the 467-m tax incentive, according to the mayor's announcement.
“The repositioning of 5 Times Square demonstrates how forward-thinking policies can strengthen and reimagine neighborhoods such as Times Square," RXR CEO Scott Rechler said in a statement. "The City and State of New York have shown that, through innovative public-private partnerships, we can transform underutilized office spaces into a thriving residential community, helping to address New York's pressing housing crisis.”
Apollo declined to comment, and SL Green didn't respond to a request for comment.
It was first reported in August that RXR was exploring the possibility of converting at least a portion of 5 Times Square into housing.
In October, the developers recapitalized the building in a deal in which Apollo converted its mezzanine position into equity, Commercial Observer reported. Corebridge reportedly stayed on as a senior lender, while Morgan Stanley was removed. Under the deal, the new ownership committed to investing another $200M in the property during its conversion.
In December, Apollo submitted an application to convert the 39-story building into a 942-unit mixed-use development. Those plans included coworking space as a building amenity.
Now, the approximately 918K SF of office space is planned to become 1,050 studios and 200 one-bedroom units, while the 37K SF of retail will be preserved, the announcement said.
Construction is slated to begin by the end of 2025, with the first phase expected to be completed in 2027. It is projected to create approximately 1,400 construction jobs and 830 direct and indirect permanent jobs, according to the city.
The 5 Times Square building has a vacancy rate of 77%. It was originally constructed in 2002 as the headquarters for Ernst & Young, which departed in 2022.
RXR and SL Green invested a significant amount of money to upgrade the property following the vacancy. In September 2022, nearly exactly two years before the recap, the developers took out a $1.3B loan to refinance the building. In doing so, they pledged $300M of the joint venture's funding for renovations.
That resulted in a full floor filled with tenant amenities such as a golf simulator, conference rooms and a private restaurant run by Michelin-starred chef Daniel Boulud. The announcement didn't state what amenities would be included in the project.
UPDATE, MAY 22, 4:55 P.M. ET: This story has been updated with a statement from RXR.
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