Introduction to the Project
There’s a major new player, and a new plan, for 300 E. 42nd St., an 18-story, 235,000 square-foot office and retail building which investor David Werner was reported to be buying at a deep discount.
Although not yet posted in public records, the purchase closed last Wednesday for $52 million, as expected — less than half the property’s last sale price in 2019.
But the twist is that Werner is flipping most of the building for a partial residential conversion, while keeping its valuable 7,300 square feet of retail for himself.
David Werner’s purchase of 300 E. 42nd St., above, closed last Wednesday. Steve Cuozzo
The Conversion Project
The conversion project will first come to life with a $45 million, pre-development acquisition loan from Ran Eliasaf’s private equity firm Northwind Group. The loan also closed last week. A construction loan is likely nine months to a year away.
Northwind a few years ago provided a $313 million construction loan to revive the then-stalled 125 Greenwich St. condo tower and has been a very active lender on the development scene.
New Owner and Plans
Eliasaf declined to identify Werner’s flippee. Nor would he confirm what residential-market sources told Realty Check — that the new owner of most of the building is CSC, a real estate investment firm specializing in the redevelopment and repositioning of distressed assets.
CSC’s New York City projects include the adaptive reuse of a former Catholic church at 2045 Madison Ave. in East Harlem, and the conversion of a decayed hostel into the hip Riff Chelsea Hotel at 397 Eighth Ave. in Chelsea.
Eliasaf did share that the plan at 300 E. 42nd St. is to leave about 90,000 square feet on higher floors, which are mainly leased to diplomatic and government tenants, as offices.
Ran Eliasaf runs private equity firm Northwind Group. JW Headshots/Northwind Group
Residential Conversion
But more than 93,000 vacant square feet will be converted to 135 rental apartments, Eliasaf said. The project will likely enjoy a tax abatement under the state’s 467-m program to facilitate residential conversions, in exchange for earmarking 20% of units as affordable.
Eliasaf noted, “The ability to deliver mostly free-market new supply is very attractive, especially in Midtown.”
The building at 300 E. 42nd St. stands diagonally across the Second Avenue intersection from two former Pfizer buildings that are being converted into a city-high 1,600 rental apartments. Werner is a partner in that ambitious project with Nathan Berman’s MetroLoft.
Conclusion
The conversion of 300 E. 42nd St. into residential apartments marks a significant shift in the Midtown real estate landscape. With the project expected to enjoy a tax abatement and offer a mix of market-rate and affordable units, it is likely to attract a diverse range of residents. As the project moves forward, it will be interesting to see how it impacts the surrounding neighborhood and contributes to the ongoing redevelopment of Midtown.
FAQs
Q: Who is the new owner of 300 E. 42nd St.?
A: The new owner is reportedly CSC, a real estate investment firm, although this has not been officially confirmed.
Q: What is the plan for the building?
A: The plan is to convert more than 93,000 vacant square feet into 135 rental apartments, while leaving about 90,000 square feet as office space.
Q: Will the project receive any tax incentives?
A: Yes, the project is likely to receive a tax abatement under the state’s 467-m program in exchange for earmarking 20% of units as affordable.
Q: How does this project fit into the broader Midtown real estate landscape?
A: The project is part of a larger trend of office-to-residential conversions in Midtown, with several other projects underway in the area, including the conversion of two former Pfizer buildings into 1,600 rental apartments.
