Two days later, state lawmakers finalized a Budget missing one suggested tax deduction Office to Residential Conversionthe “king of conversions” himself says he doesn’t agonize over missed opportunities.
Founder of Metro Loft Nathan BermanHe has gained fame since the 1990s for converting downtown office buildings into residential buildings, and he said that while his firm has historically shied away from midtown projects, that has changed.
“We’ll never be able to put the numbers to work,” Berman said Thursday. real dealNYC Showcase + Forum. “But what we’re seeing now is that the values have dropped to the point where it starts to make sense. Frankly, that hasn’t come from [government]”
Prices for older office buildings are slipping to the $200 to $300 per square foot range, and the time is ripe for remodeling, developers say.
That range will keep many assets priced below the cost of the ground they sit on, paving the way for developers to snap up properties they’ve been eyeing to convert.
“I think you’re going to start to see a lot of transformation in midtown because we can call downtown that over the last 15 to 20 years,” Berman said.
In addition to state incentives, the city considered ways to incentivize conversions outside of the Financial District—where zoning adjustments in the 1990s created larger groups of convertible buildings.
Last year, a task force dropped a proposal that the city rezoned parts of Midtown that had been heavily zoned for manufacturing to create more conversion opportunities.
So far, neither the mayor nor the city council has taken any action on the recommendation.
But Silverstein Properties CEO Marty Burger partnered with Berman to launch silver loft, A $1.5 billion conversion project, says city help isn’t always a bonus.
“One of the things we’ve learned from working with Nathan is that if you have to talk to the city — don’t do it,” Burger said. “Work on the next project because it’s too damaging to the brain.”
Burger added that Gov. Kathy Hochul’s proposed tax break to incentivize office remodels won’t provide much financial help anyway.
The proposal would extend the 50 percent property tax break for 15 years if the developer reserves 20 percent of the units in the project as affordable units.
“We applied it to a building we were building, and it didn’t work; it didn’t add to what we were doing,” Burger said.
“So we say [to the mayor], it’s a major political issue — don’t fight over it because nobody’s going to use it,” the executive said. “Even if it’s just breaking even, we’re not going to do it. “
Given the promise of affordable housing, developers need a 75 per cent tax break over 25 years to keep development costs in line with revenues, Burger said.
Despite the energy surrounding the potential conversion, Berman emphasized that these projects aimed at redeveloping obsolete inventory will address only a small portion of the city’s office inventory.
“Don’t expect this to be an avalanche of transformation for the city,” Berman said. “There will be dozens of major building changes, but not all of them.”
“I’m not going to write any obituaries for the office market,” Berger added. “It will come back.”
