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Metro Loft Management CEO Nathan Berman, the “king of office conversion,” has his biggest project yet in the pipeline.
Berman has a deal in place for an almost 50% stake in the former headquarters of pharmaceutical giant Pfizer from prolific real estate investor David Werner, The Real Deal reports. Berman plans to convert the Midtown office campus to approximately 1,500 rental units.
The conversion at 219-235 E. 42nd St. would be the largest in the city thus far, exceeding Berman's ongoing project with partners GFP Real Estate and Rockwood Capital to convert 25 Water St. in the Financial District to 1,300 apartments.
In 2018, Pfizer announced it would be moving out of the two office buildings and relocating to Tishman Speyer’s Spiral office tower next to Hudson Yards. Werner swooped in to buy the leasehold on the 820K SF, 33-story building at 235 E. 42nd for $407M. He is also reportedly in talks to buy the ground from the estate of late real estate investor Bernard Kayden, according to TRD.
Life sciences giant Alexandria Real Estate Equities owned 219 E. 42nd St. next door and had explored redeveloping the building into lab space. But the market slowdown caused it to change its plans and offload the building to Werner earlier this year.
“In New York City, the life science market there remains ... still a small, startup market,” Alexandria Chairman Joel Marcus said on an earnings call in January in reference to selling the Pfizer building.
Converting New York office space can be expensive and difficult. However, plans for new projects are growing as both the office availability rate and apartment rents continue to set new records.
This week, it was revealed that GFP Real Estate is in contract to buy a 31-story FiDi office tower for $150M, with plans to convert the nearly vacant building into housing. Founder Jeff Gural also plans to convert the iconic Flatiron Building, which he won at auction last year, to residential use.
In January, it was announced that investor Tony Park and South Korean media company MediaWill are considering rental apartments for the office portion of a 10-story property blocks from Penn Station.
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