News Summary
The Vanbarton Group has completed the acquisition of 5 E. 42nd St. in Midtown Manhattan for $135 million. The 27-story building will be transformed into a rental complex with up to 500 units, responding to the city’s housing demand. This purchase follows new zoning regulations allowing such conversions, part of the ‘City of Yes’ initiative. With occupancy at 92%, the project will leverage tax incentives for affordable housing while contributing to the evolving residential landscape in New York City.
New York City – The Vanbarton Group has recently completed the acquisition of 5 E. 42nd St., a prominent 27-story tower in Midtown Manhattan, for a total of $135 million. This purchase was made from the Milstein family, with the deal going into contract back in May and finalizing on a Monday afternoon.
The 375,000-square-foot postwar structure, which was completed in 1968, previously housed Emigrant Bank and is conveniently situated near Fifth Avenue. Vanbarton plans to transform the building into a rental complex that will feature up to 500 residential units, a significant addition to the housing market in this bustling urban area.
Converting buildings like 5 E. 42nd St. into residential spaces was historically restricted due to zoning laws aimed at preventing speculative office-to-residential transitions. However, this changed with the introduction of the “City of Yes” program, which was approved late last year. This initiative revised regulations and now allows conversions for most buildings constructed between 1961 and 1991, thus aligning with Vanbarton’s development goals.
In order to maximize the potential of the building conversion, Vanbarton is expected to leverage the 2024 tax incentive known as 467-m. This incentive provides up to 35-year tax abatements for developers who allocate 25% of their units as income-restricted housing, making the project financially viable while also contributing to affordable housing in the city.
In addition to the 5 E. 42nd St. project, Vanbarton is also undertaking another significant conversion project at 1005 First Ave., which was formerly the headquarters of the Archdiocese of New York. This project will involve adding six stories and creating 420 units, further illustrating Vanbarton’s commitment to enhancing the residential landscape of New York City.
The Midtown building at 5 E. 42nd St. currently boasts an occupancy rate of 92%. The office rents in the immediate area are approximately $65 per square foot annually, indicating a thriving commercial space alongside residential developments. The building is classified as a Class A property, which is considered a premier classification within the real estate industry, catering primarily to businesses associated with Emigrant Bank, such as Boylan Bottling Co.
The Milstein family had originally acquired 5 E. 42nd St. as part of their purchase of Emigrant Bank back in 1986. This latest transaction highlights the growing trend towards office-to-residential conversions in New York City, which has gained momentum as developers seek to adapt to changing market demands and utilize available commercial spaces efficiently.
Overall, the acquisition of 5 E. 42nd St. marks an important step in Vanbarton’s expansion strategy within the New York City real estate market while concurrently addressing the ongoing need for more rental units in the area. The trend towards conversion projects like these could play a crucial role in shaping the residential fabric of the city in the coming years.
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Additional Resources
- Crain’s New York: Rudin Plans 355 Lexington Ave Office-Residential Conversion
- Multihousing News: CSC to Convert Midtown Office Tower to Mixed-Use Property
- 6sqft: NYC’s First Wave of Office-to-Residential Conversions
- The New York Times: Midtown Development – Pfizer Headquarters
- CBRE: A New Era of Office-to-Residential Conversions
- Wikipedia: Real Estate Development
- Google Search: Office to Residential Conversion NYC
- Google Scholar: Office to Residential Conversion
- Encyclopedia Britannica: Urban Development
- Google News: NYC Real Estate Trends
Author: STAFF HERE NEW YORK WRITER
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