S3 Capital Lends $102M for Hell’s Kitchen Office-to-Resi Conversion
By Andrew Coen June 23, 2026 4:08 pm
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Developer Hershy Silberstein has sealed $102 million of construction financing to execute an office-to-residential conversion of the Press Building in Manhattan’s Hell’s Kitchen, Commercial Observer can first report.
S3 Capital supplied the loan for Silberstein’s planned transformation of 311 West 43rd Street in partnership with his general contractor firm Blue Sky Builders into 160 apartments and 39,712 rentable square feet of commercial space. The deal, which closed Monday, marks the first office-to-resi deal for S3 after originating a number of multifamily construction loans across the country.
“We’ve underwritten many office-to-residential conversions over the years, but this is the first where everything aligned,” Shawn Safdie, head of origination at S3. “It starts with the sponsorship group, who we have developed a deep repeat relationship with.”
Safdie added that the transaction was attractive due to the property’s location in “one of Manhattan’s most supply-constrained submarkets” coupled with “a building layout that’s ideal for a conversion project.”
Located west of Times Square on 43rd Street between Eighth and Ninth avenues in Midtown West, the 15-story Press Building was acquired by DivcoWest Real Estate Investments from Billy Macklowe’s William Macklowe Company in December 2018 for $131 million, CO previously reported. WeWork signed a 66,000 square-foot lease in the 168,299-gross-square-foot office building in late 2016 before vacating the space along with 39 other underperforming locations in late 2022. Japanese restaurant and lounge Fushimi currently leases the ground-floor space.
David Werner, who has executed a number of office-to-resi conversions around Manhattan, was in contract to purchase 311 West 43rd Street for around $40 million in April, according to The Real Deal. The deal never went through, however, and Silberstein recently acquired the property for an undisclosed purchase price, according to S3.
The Midtown West area of Manhattan has delivered 4.5 percent annual rent growth over the last five years with a vacancy rate of 3.5 percent in that period, according to S3. The conversion will benefit from the 467-m tax abatement program since 25 percent of the units will be set aside for people earning an average of 80 percent of area median income.
“We have always believed that public-private partnerships are the best way to stimulate housing development,” Robert Schwartz, managing principal at S3 Capital, said in a statement. “The 467-m program is a pragmatic solution that is directly alleviating the shortage of rental units here in Manhattan.”
Meir Landau, chief financial officer at Blue Sky Builders, said in a statement S3 Capital was well suited for the “time sensitive” transaction” given its experience with construction financing and “their flexibility and speed to close.”
Arrow Real Estate Advisors arranged the transaction with a team consisting of Morris Betesh, Israel Mermelstein, Jack McPhail and Joseph Kean.
“Successfully financing an office-to-residential conversion in New York City requires a deep understanding of floor plans, existing tenancy, zoning, tax, and the capital markets,” Betesh, founder and managing partner at Arrow, said in a statement. “311 West 43rd required the ArrowREA team to bring all of those disciplines together at once.”
Andrew Coen can be reached at acoen@commercialobserver.com.
