160 Water Office-to-Residential Conversion to Provide 600 Units at Market Rate

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Vanbarton Group is inching closer to converting 160 Water Street in the Financial District into a residential tower, and Mayor Eric Adams is paying close attention.

While representatives of the developer say the project, which would include 588 new market-rate units, is still two years from completion, Adams is looking to it as an example in his push to remove legal hurdles standing in the way of office-to-residential conversions.

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There are, however, no affordable units in the building apart from the 20 percent required by the Mandatory Inclusionary Housing (MIH) law, with rents starting at $3,000 per month for a one-bedroom. 

Nevertheless, Adams views 160 Water Street’s conversion as proof that his quest to create 500,000 units of housing over the next 10 years — with office-to-residential conversion built in — is a valid framework to boost mixed-income building.

160 Water Street “makes it clear what we can do with more of our vacant office buildings. We’re talking about millions of square feet of office space,” Adams said Monday morning. “What we have in the city is a housing crisis and the goal is to build low income, middle income and market [rate] and to shore up NYCHA, so it’s not a one size fits all. … This project here is market rate.”

Until there is a replacement for the now-expired 421a program, Adams said, there may not be many options for the city to incentivize the building of new affordable housing.

The firm is side-stepping away from the office market — as many other landlords also are — with a sluggish return to office changing portfolio preferences nationwide. 

Studies show that there is no real end in sight when it comes to turbulence in the  office market. A Cushman & Wakefield (CWK) report released in February claimed that the U.S. is likely to end the decade with 1.1 billion square feet of vacant office space and more than 25 percent of the country’s total 5.56 billion square feet of office — about 1.4 billion — entirely obsolete, CO recently reported.

Vanbarton secured the aforementioned construction loan from Brookfield (BN) Real Estate Financial Partners after acquiring it in 2014 for a total of $165 million, Commercial Observer reported in August 2022 when the firm got the funding.

By September 2021, Vanbarton was looking for buyers for the property with an asking price of $200 million with an additional $200 million expected to be needed for a conversion, The Real Deal reported at the time.

Mark Hallum can be reached at mhallum@commercialobserver.com.