TF Cornerstone Closes Ground Lease to Convert 135 East 57th Street to Residential

TF Cornerstone closed on a deal that will be the first step in converting a Billionaires’ Row office tower into residential.

The family real estate firm signed a ground lease with the Wallace family that will allow TF Cornerstone to turn the 32-story office tower at 135 East 57th Street into a residential property, adding to the city’s housing stock amid a national shortage.

Known to Spiderman fans as the Oscorp Tower and to the real estate world as Tower 57, TF Cornerstone will reshape the interior of the property at Park and Lexington avenues into 350 market-rate and affordable apartments, the development firm announced.

“What we love about conversions is that you’re usually inheriting great architecture with great features that you normally wouldn’t develop in a ground-up multifamily, mixed-income building,” Jeremy Shell, principal with TF Cornerstone, told Commercial Observer.

The floorplates in the building make it ideally suited to an office-to-residential conversion, with most office buildings leaving developers with no choice but to create deep — and usually sparsely sunlit — floorplans once turned into residences.

“We’re not afraid to look at buildings that have deeper-than-average floor depths. We’ve actually created a lot of product out of those types of spaces and we think they function quite well,” Shell said. “This particular building is unusual, which is why we were drawn to it. It has a very properly dimensioned floorplate for residential.

The narrow structure’s 12-foot ceiling heights and floor-to-ceiling windows means that natural light will be able to penetrate the floor plates, which range from 5,700 to 14,000 square feet. Typical offices in New York have floor plates between 30,000 and 50,000 square feet. Floor plates in the 10,000-square-foot range are rare, according to Shell.

The majority of the rooms in the residential units will be on the perimeter of the building, giving them access to light, though there might be a few rooms in the units that don’t have windows.

The project is expected to be completed by 2028, according to Shell.

JLL‘s Andrew Scandalios, David Giancola, Drew Isaacson and Jennifer Zelko represented the Wallace family in the transaction.

TF Cornerstone will use the state’s new 467-m tax exemption program, designed to make office-to-residential conversions more financially feasible, in order to offset the costs of the construction, according to the firm.

Mayor Eric Adams’s City of Yes for Housing Opportunity passed in December, allowing TF Cornerstone to complete the conversion as of right.

Twenty-five percent of the units will be affordable at 80 percent of area median income, according to Shell.

Charles Cohen’s Cohen Brothers Realty had held the ground lease on the property since the late 1990s. The lease was canceled by the Wallace family after a period of pandemic-related distress, including a lawsuit between Cohen and Saks & Company over $1.9 million in back rent in 2020 for its Saks Off 5th outlet.

TF Cornerstone currently owns 12,000 residential units, with 4,500 of those apartments harvested from former commercial spaces across 15 projects such as at 45 Wall Street, 95 Horatio Street and 201 East 69th Street in New York, and the Wanamaker building in Philadelphia, which will host over 600 units upon completion.

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