The real estate market in New York City has recovered from the recession of 2008. The improvement has marked a rapid conversion of office buildings, hospitals, parking garages and other asset classes into luxury rental and condominium residences, hotels and in certain instances specialty office space. The conversion of properties is taking place in each and every borough especially in Manhattan, Brooklyn and Queens.
A joint venture of Rose Associates and DTH Capital are converting the 66 story, Art Deco, landmarked high rise which served as the former headquarters of AIG at 70 Pine Street into 644 residential rental units and 132 extended stay hotel units. The developers have signed a contract with Furnished Quarters to manage the extended stay units which will be located on the third to the six floor of the tower.
A few blocks from 70 Pine Street is the 57 story, landmarked Woolworth Building at 233 Broadway. In August 2012, an investment group led by Alchemy Properties and a private equity firm paid $68 million to a partnership of the Witkoff Group and Cammeby’s International for the top 30 floors of the office tower. The joint venture is converting these floors into 34 one to four bedroom apartments, topped by a five story penthouse at the top of the building. Industry leaders expect the units to fetch more than $3,000 per square foot.
A number of former Verizon (New York Telephone) office buildings which served as office and switching towers have been converted into data centers, luxury high end condominiums as well health care use. In the fall of 2013, Ben Shaul’s Magnum Real Estate purchased the top 21 floors of the Verizon building at 140 West Street. The developer plans to convert the 1.8 million square feet into luxury residential condominiums.
In May, an investor group led by Harry Macklowe’s Macklowe Properties entered into a contract to purchase the 1.1 million square foot Art Deco skyscraper located at One Wall Street. The tower, which currently serves as the New York City headquarters of Bank of New York Mellon, is expected to be converted into luxury residential condominiums. The joint venture paid $585 million for the tower or about $530 per square foot.
Last November, a joint venture of Korman Communities, Shorewood Real Estate Group, LLC and Prodigy Network acquired the office building at 84 William Street. The joint venture plans to renovate the property for conversion to AKA Wall Street, a high end fully furnished extended stay residence. The AKA brand is a division of Korman Communities which specializes in short term luxury rentals for periods of weeks to months and longer. When completed later this year, the property will feature 140 guest suites that will range in size from 150 to 1,000 square feet.
Other properties in lower Manhattan which are in the process of conversion to hospitality use include the former apartment building at 32 Pearl Street, located between Wall and Broad Street as an eight-story Hampton Inn. The 17 story office building at 170 Broadway will be converted into a 243 room Marriot Residence Inn which will include 243 hotel rooms and approximately 20,000 square feet of retail space. The former six story office building at 24 John Street is under renovation into a 22 story hotel with a total of 128 rooms.
Another major mixed use conversion is the landmarked nine story building commonly known as Temple Court at 5 Beekman Place. The property is being converted and expanding into a tower which will stand 47 stories. When completed in 2015, the building will have a 288 hotel rooms including two duplex suites. Luxury condominium residences will rise from the 13th floor.
A number of hospitality properties have been converted into extended stay and residential rental properties. In 2006, the Eastgate Hotel and the Beekman Tower Hotel were acquired by a joint venture of Irish investors and former managing director of Tishman Hotels. During the recession, both properties incurred serious financial difficulties. In January 2013, a joint venture of Silverstein Properties, Fisher Brother and Capstone Equities purchased the Beekman Towers for $82 million. The joint venture has converted the former 170 room transient hotel located at East 49th Street and First Avenue into furnished, luxury corporate apartments which will require a minimum stay of 30 days.
In December 2012, an investment group led by Atlas Capital Group, Rockpoint Group and Procaccianti Group purchased the former Eastgate Hotel at 222 East 39th Street. The former hotel has been converted into “The Nash”, a 191 unit rental building with studio to three bedroom apartments as well as a limited number of extended stay hotel rooms. The property which includes a 100 space parking garage was sold earlier this year to investor Lloyd Goldman, BLDG Management for $126 million.
All of the luxury residential apartments have been leased in the gut renovation of the site of the physician and residence housing previously owned by St. Vincent’s Hospital at 555 6th Avenue. Stonehenge Partners purchased the site and renovated the full block property into a mix of studio and one bedroom apartments and unique retail stores on the 6th Avenue between 15th and 16th Street.
Last summer, the former Colony Arcade Building, located on West 38th Street between Fifth and Sixth Avenues built in early 19th century which served as a hat factory was converted into the 12 story Refinery Hotel with a total of 197 hotel rooms.
The former Flatotel at 129 West 52nd Street is in the process of conversion into 109 units, spanning floors 8 to 46, including a three level penthouse. The lower floors of the tower will remain as commercial office space.
Sales are expected to be launched this spring for the conversion of another Verizon Building located at 435 West 50th Street between Ninth and Tenth Avenues. A joint venture of JDS Development Group and Property Markets Group, the team who converted the Walker Tower (also a conversion of a Verizon Building on West 18th Street in Chelsea) is converting the property into Stella Tower.
One of the most active markets for hospitality in New York City is Times Square. This Spring, the Knickerbocker Hotel will open in built which was originally constructed as a hotel by John Jacob Astor IV. The property, at the corner of Broadway and 42nd Street (142 West 42nd Street), was converted to office use and will re-open as a boutique hotel.
One of the dinosaurs of the 21st century is Manhattan’s free standing garages, which have been replaced by hotels and residential condominiums. As reported in the New York Post, Atlas Capital and Rockpoint Group, the investment group who acquired and renovated the former Eastgate hotel, have entered into a long term lease and plan to redevelop the eight story, 99,558 square foot parking garage and auto repair shop located at 430 West 15th Street into a modern office building.
Renovations are underway for the conversion of a garage at 17 East 12th Street into a luxury condominium with one apartment per floor and a duplex penthouse on top. A few blocks away at 12 East 13th Street, a development team of Continental Properties and DHA Capital are converting an eight story former Hertz garage and adding a triplex to the top of the building.
More than two dozen hotels have been built over the past five years in the Long Island City section of Queens. In December, a new hotel opened in a renovated one hundred year old paper factory. The five story, 122 room Paper Factory Hotel, located 37-06 36th Street. The property includes antique paper machines, skids uses as coffee tables, and metal walls in the lobby. In addition to hotel rooms, the property offers casual dorm rooms with bunk beds.
Everyone wants to live, work, shop and visit the borough of Brooklyn. One of the original hotels that was built in 1909 in the Brooklyn Heights section of Brooklyn was The Bossert. The property was purchased in the 1980s by Jehovah Witnesses and Watchtower Corporation and ran as a residence and hotel for members. The hotel was acquired by real estate developer David Bistricer and Joseph Chetrit (who also purchased the Sony Building on Madison Avenue), and they are in the process of converting the property into a 300 room boutique hotel.
The historic Bronx Opera House, located at 456 East 149th Street in the South Bronx, was the home to performances by Harry Houdini, the Marx Brothers, John and Lionel Barrymore, Eddie Cantor and George Burns, to name a few. 100 years since its inception, the property has been restored to a luxury boutique hotel, located just one block from the express subway lines on the 149th Street station.
Earlier this year, the former St. John’s Hospital building on Queens Boulevard across from the Queens Center Mall was sold to a developer who plans to convert the former medical facility into a residential building. The sale included the 260,000 square foot hospital building at 90-02 Queens Boulevard and a five story parking garage at 87-28 58th Avenue in Elmhurst. In addition to residential, the developer plans to build ground floor retail as well as space for medical offices.
Leasing has just commenced for Chetrit Group and Clipper Equity’s conversion of the former bankrupt Caledonian Hospital located at 123 Parkside Avenue in Brooklyn. The seven story building has been converted into 119 rental units.
For more than a decade developers have had plans for Flushing’s landmarked RKO Keith Theater. Last December, the site was acquired by JK Equities paying $30 million for the site. According to the press, the developer plans to build a 17 story condominium tower above the historic theater, which will be incorporated into the building as the lobby. The development will include 385 parking spaces and 23,000 square feet of retail.