New York developer Silverstein Properties is seeking to raise $1.5 billion for converting older offices to residential buildings.
The landlord, known for developing towers at the World Trade Center, is in talks with investors to kick-start what could be a "$10 billion-plus" opportunity, Chief Executive Officer Marty Burger said in an interview. The firm is exploring acquisitions of Manhattan office buildings that are facing growing vacancies or debt burdens. The effort could potentially expand to other areas of the US, such as Washington, D.C., Boston and the West Coast.
"It's a huge market," Burger said. "Our acquisition group is solely focused on this right now."
Read more:
Earlier this year, Silverstein Properties agreed to buy a Financial District office building with partner Metro Loft Management. They plan to start transforming the property, at 55 Broad St., into residential units in 2023, Burger said. It will be Silverstein's first joint-venture conversion project with Metro Loft.
Last year, Silverstein purchased 116 John St., a former office tower that Metro Loft had already converted to housing.
New York landlords are exploring opportunities to convert obsolete offices to residential use as vacancies and costs for modernizing the properties mount. With some tenants scaling back their space, and others flocking to newly built developments, many older towers sit largely empty. At the same time, demand for apartments in Manhattan pushed rents to records this year.
"Now is the perfect storm where office is not in favor, and the residential market is very hot," Burger said. "Hopefully we can acquire some of these office buildings that may be obsolete or may not be their highest and best use as an office building, and convert them to residential use, which the city desperately needs."
Eastdil Secured is advising Silverstein on the fundraising effort.
