Latest Candidate for Conversion to Apartments Will Contain Some Affordable Units
Another 1970s-era office tower in the Financial District is being acquired for conversion to residential use. The 26-story building at 77 Water Street is now under contract with the Vanbarton Group, a development firm that has previously converted several other Lower Manhattan office towers into apartments, including 84 William Street, 160 Water Street, and 180 Water Street.
The building at 77 Water Street encloses approximately half a million square feet and could accommodate 625 apartments, under current zoning regulations. Vanbarton has agreed to pay $95 million for the tower. In 2014, it was valued at roughly $235 million.
Preliminary indications are that the developer plans to take advantage of tax incentives that would require one quarter of the new apartments to be set aside as affordable units, while the rest would be market rate.
This plan is the latest in a wave of office conversions in Lower Manhattan, including 25 Water Street (1,300 units), 222 Broadway (798 units), and 55 Broad Street (571 units). These four buildings alone will create 3,294 new homes, which augurs a growth in local population of nearly 7,000 new residents (based on 2020 census data that indicates the typical size of a Lower Manhattan household is now 2.02 persons). The current Community District 1 population is 78,390.
While converting office buildings (a sector that has experienced acute distress since the work-from-home trend that began during the Covid pandemic) to residential use can be an alluring option for developers, the business model is not without peril. A few blocks from 77 Water Street, the rental building at 20 Broad Street (converted from a 1956 office tower to apartments in 2018) is on the brink of foreclosure as a $250 million mortgage comes due, which developer Metro Loft (another firm that specializes in conversion) has said it is unable to pay.