Manhattan’s class B office buildings may soon become an endangered species.
As apartment prices skyrocket amid growing global demand, more and more office buildings are being converted into residential buildings.
Two weeks ago, the Chetrit Group filed plans to convert part of the Sony Building at 550 Madison Avenue in Midtown from office space to 96 condominiums.
The units will join a growing number of former commercial towers turned residential, headlined by the Woolworth Building, where Alchemy Properties is converting the top 30 floors into 34 luxury apartments.
The 8,975 s/f penthouse at the Woolworth will ask a staggering $110 million, while three other apartments will ask more than $20 million.
Few other office-to-residential conversions can command similar prices, but brokers and appraisers agree that the higher returns offered by condo sales are the main reason for the conversion trend.
“The returns on residential development — especially because the focus has been on luxury — make a residential conversion competitive with commercial use,” explained Jonathan Miller, of appraisal firm Miller Samuel.
“The focus seems to be on converting everything that’s not tied down to residential. We are in this window where development opportunities are being explored in all property types.”