Rudin Planning to Convert 355 Lexington Avenue to Residential

Rudin’s 65-year-old office tower at 355 Lexington Avenue could house residential tenants in the future, Commercial Observer has learned.

The landlord — which built the 22-story building in 1959 — is considering an office-to-residential conversion at the property and has already started telling tenants they might soon need to find new office space, sources said.

Rudin confirmed the plans Wednesday but did not provide a time frame or any details on the work. One source told CO the conversion wouldn’t happen “anytime soon.”

“As a responsible long-term owner, manager and developer of New York City real estate, we are constantly evaluating all options for our portfolio, including the potential for office-to-residential conversions,” a spokesperson for Rudin said in a statement. “We are in the early stages of the process with respect to 355 Lexington Avenue and look forward to moving this project forward in the near term.”

The 270,000-square-foot Emery Roth & Sons-designed building stands at the corner of Lexington Avenue and East 40th Street, three blocks from Grand Central Terminal, and was 84 percent leased as of December, Crain’s New York Business reported. Recent leases at the property — which had asking rents of $55 per square foot — included educational specialist Lindamood-Bell taking 5,521 square feet in May and quality control firm Applause signing on for 17,500 square feet in October 2022.

Rudin joins a wave of owners converting aging New York office buildings to residential towers, something expected to gain even more popularity thanks to the recently passed City of Yes zoning overhaul, which was itself a reaction to the city’s housing crisis. And Rudin already has a hand in one such project in Lower Manhattan.

In 2022, it sold its 30-story Financial District building at 55 Broad Street to Silverstein Properties and Nathan Berman’s Metro Loft Management for $180 million, with the new owners converting it into a 571-unit multifamily building.

William Rudin, co-executive chairman of the family-owned firm, told The New Yorker it kept a small stake at 55 Broad in order to get a chance to see Berman — a driving force behind many office-to-residential conversions in the city — at work.

“We wanted to see the maestro, like a front-row seat to see Leonard Bernstein,” Rudin told the magazine in April.

Apartments at 55 Broad started leasing in October, and now Rudin appears to be tackling its own project uptown (though a source said this particular project would not involve Berman). It’s not the only office building in the neighborhood considering the same, either.

In July, RXR started to study the feasibility of converting a portion of the nearby Helmsley Building into residential after it defaulted on the property’s $670 million loan and saw its value drop 40 percent over the last three years.

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.