Don Peebles, Doug McNeely Raising $1.5B for Office-to-Resi Conversions Across U.S.

Don Peebles and former Carlyle Group partner Doug McNeely have started a joint venture to raise money for office-to-residential conversions around the country.

The venture, dubbed Donahue Douglas, is looking to raise a $1.5 billion fund to buy office properties in Boston, Washington, D.C., New York City, Atlanta, San Francisco and five other U.S. cities, and convert those properties to housing, Bloomberg reported Friday.

Peebles did not immediately respond to a request for comment, but Bloomberg reported that the fund is already experiencing a high level of interest from foreign investors.

“There’s just a tremendous opportunity to acquire commercial office buildings at distressed conditions and produce outsized returns and produce valuable assets to the country,” Peebles told Bloomberg. “All these things are the perfect storm for the conversion business.”

Not only are municipal and state governments offering tax incentives, like New York’s 485x, to developers that create new housing, but conversions also may be a hedge against material cost increases due to President Donald Trump’s unpredictable tariff policies.

The Peebles Corporation has been seizing on opportunities for office-to-residential conversion for some time, with the firm and El Ad Group securing a $229.4 million refinance in 2022 for 108 Leonard Street in Tribeca. The former office building known as the Clock Tower Building now has 167 residential units as well as 50,000 square feet of retail and amenities.

The conversion project began in earnest in 2016, well before the trend accelerated in the wake of the pandemic, when many obsolete offices essentially became obsolete husks. And the trend has been popular in New York City with 5,500 units already developed from former office space since 2010 and another about 19,000 on deck in the next eight years, the New York Post reported in January.

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