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RXR Realty is exploring the possibility of converting a portion of 5 Times Square into housing, Commercial Observer reported, citing anonymous sources.
The 1.1M SF, 39-story office tower has been a problem property for RXR and SL Green Realty Corp., who co-own it. In September 2022, the building was just 31% occupied.
That’s when the developers took out a $1.3B loan from a group of lenders, including Morgan Stanley, Apollo Global Management and American International Group, to refinance the 2002-built tower. The joint venture also pledged $300M of its own funding for renovations. In addition to the renovated lobby and restrooms, the building’s fourth floor is now dedicated to amenities, including a gym and golf simulator.
The tower’s vacant space has been taken off CoStar’s listings service, and the building’s leasing team said it is not looking for new tenants, according to CO.
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Major office owners around the U.S. are increasingly analyzing their portfolios for office-to-residential conversion potential.
RXR is also examining the potential for a partial conversion of Park Avenue’s Helmsley Building, commentary provided by Morningstar Credit revealed last month. The firm, run by Scott Rechler, defaulted on a $670M loan backed by the historic 34-story office building after it matured Dec. 8.
SL Green CEO Marc Holliday has also been vocal about evaluating office conversions. He said during a conference call in April that the REIT played an “instrumental role” in advocating for legislation that includes tax abatements for residential conversions.
At 750 Third Ave., SL Green plans to turn an 81% vacant office tower into 543 units of housing.
“Don't get the impression that these Midtown buildings are bad buildings,” Holliday told investors during the call. “They're just buildings that can be optimized as residential and should be optimized as residential and don't necessarily warrant the same level of investment as buildings [where] we’re achieving $90 a square foot and above. That's where that investment should go.”
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