(Bloomberg) -- A minute’s stroll from the New York Stock Exchange, down a cobblestone street once lined by imposing headquarters for the titans of finance, a corner office has taken on new meaning.
Starting Monday, New Yorkers can lease an apartment in the former headquarters of Goldman Sachs Group Inc. at 55 Broad St., where it was based from the late 1960s to the early 1980s. Across the street, in those days, were the offices of Drexel Burnham Lambert, while up the road stood the grand homes for Bank of America Corp. and what was then J.P. Morgan & Co.
It’s a different scene today. The financial industry’s grip on the neighborhood is long gone, and the pandemic accelerated the shift. A New York Sports Club that just a few years ago was filled with banker bros is now an indoor playground for young families, while a Serafina restaurant occupies what was previously a men’s suit store. Now, anybody with $4,000 a month can live in the very space Gus Levy cemented Goldman’s legacy as a trading powerhouse.
The financial district has evolved into “a 24/7 area,” said Nathan Berman, chief executive officer of Metro Loft Development, one of the developers on the project. “It used to be the consolation prize, now it’s a destination for people and a very reliable neighborhood.”
Last year, Metro Loft and Silverstein Properties seized on the nearly 60-year-old tower, which was struggling to lure commercial tenants looking for newer buildings. According to Larry Silverstein — for whom this office-to-residential conversion will be a first — the building’s wedding cake shape is ideal for such a project, because no void had to be created for apartments to get light.
“It has a large base, but then over the base the building comes in and rises, so the tower over the base is perfect for residential use,” Silverstein said in an interview from his office in 7 World Trade Center. “Every apartment is going to have windows, windows, windows.”
The turnaround of the curtain-wall structure from drab offices into 571 apartments is expected to be completed by the middle of next year. The smaller, higher-floor units in the 36-story tower are nearly done, and move-ins for those will begin in November.
The apartments boast 10-foot (3 meters) ceilings, water views and custom Italian kitchens, and the building will have amenities including a fitness and yoga center, pet-washing stations, a rooftop swimming pool and grilling stations.
Vicky Ma, an associate at a startup who lives in the neighborhood, said the opening of the Whole Foods on Broadway and the Tin Building food hall in the South Street Seaport have helped redefine the area. While it can still be desolate at night, and she has gripes with violent crime and rising homelessness, “living here afforded us the ability to have luxury amenities and access to childcare and recreational options without having to give up the space we have,” she said.
The architect on the 55 Broad St. project, John Cetra of CetraRuddy, used the setbacks from the three-tier structure to create outdoor terraces. Hallways with bathrooms, closets and Bosch washer and dryers snake through the spaces to reach the windowed living areas. On the lower floors, which have larger floor plates, the apartments will include windowless home offices facing the building’s interior, geared toward professionals who work at least part-time from home.
The developers bought the 440,000-square foot (37,161 square meters) property for $173 million, or $393 per square foot, and received an equity investment from Ares Management Corp. for the conversion. Metro Loft’s Berman wouldn’t say how much the conversion will cost, but has said that similar projects typically cost up to $375 per square foot. All-in, that’s about 60% of what it might cost to construct a new building, he said. That doesn’t even account for the money saved bypassing the multi-year permitting process involved in new builds.
Studios will rent for about $4,000 a month while three bedrooms will cost about $10,000 a month. Sizes will vary but one of the two-bedroom apartments, for example, is about 900 square feet.
“I think it’s going to be profitable,” said Silverstein. “I hope it’s going to be profitable. I’ll be disappointed if it’s not profitable.”
Cetra is hoping to work on two more conversions nearby: AIG’s former offices at 80 Pine St. and a tower at 61 Broadway. Brooklyn developer Bushburg Properties bought 80 Pine this year for $160 million and is submitting initial filings for a more than 1,000-unit conversion. RXR defaulted on its $240 million loan on 61 Broadway in late 2022 and is early in the conversion process.
The financing environment has been a challenge. Metro Loft and its partners were unable to repay a five-year $250 million mortgage that came due earlier this month on a converted tower at 20 Broad St., one of the 15 conversion projects listed on its website.
While the building is operating at 99% occupancy, its investors are “determining whether or not it is economical to put in the additional capital necessary for refinancing,” said Berman. “This situation is not specific to conversions - it is happening across the multifamily and commercial space.” The Federal Reserve's 50-basis point interest rate cut last week “will help alleviate the financial gridlock the industry has been experiencing.”
Further north, Metro Loft’s conversion of Pfizer Inc.’s former headquarters on East 42nd Street is underway. They expect it to be New York’s largest office-to-residential conversion when complete, with about 1 million square feet transformed into 1,500 rentals.
More: NYC’s Worst Housing Squeeze in 50 Years Is Set to Get Even Worse
The city and state are seeking ways to encourage more conversions to help alleviate New York City’s housing shortage, including offering tax breaks for projects that include affordable units. At 55 Broad St., the developers are mulling making a quarter of the units affordable in exchange for tax abatements as part of the state program, pending more information from policymakers.
The city is also offering office owners that could turn their properties into 50 or more housing units an accelerator program to navigate government approvals. As of mid-September, more than 70 buildings were part of the program, and the city council is expected to vote on a bill this year to make more of them eligible for such conversions.
If the bill passes, “the interest will really shift to midtown,” Cetra said.
--With assistance from Andrew Harrer.
(Updates with purchase price for 80 Pine St. in 14th paragraph. A previous version of this story corrected the type of investment by Ares in the Broad St. conversion.)
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