Affordable Housing Lottery Opens for Converted Office Building in FiDi
A City-sponsored drawing has opened for affordable dwellings in an erstwhile office building, newly converted to apartments, at 55 Broad Street. The 1960s-era commercial building at the corner of Beaver Street has been transformed into 571 apartments by developers Larry Silverstein and Nathan Berman, who paid previous owner Rudin Management $180 million for the structure in 2022.
One quarter of the new homes in the building are set aside as rent-restricted apartments, for which leases will be offered in the range of $912 (for studios) up to $3,522 (for three bedrooms). The units will be available to individuals and families earning between 40 percent and 100 percent of “area median income” (AMI), a federally determined metric used by housing advocates and policymakers to compare the costs of living in various parts of the nation, and redefined each year. The AMI range for 55 Broad Street is between $45,630 in annual income for a single-individual and $175,000 for a family of five. (The lottery for 55 Broad Street also imposes asset limits of between $64,800 and $162,770, depending on family size.) Among the affordable apartments at 55 Broad are 70 studios, 63 one-bedroom units, nine two-bedroom units and one three-bedroom residence.
In exchange for setting aside 143 apartments as rent-restricted units, the developers of 55 Broad Street will receive an abatement of 90 percent of property taxes for the entire building for 30 years, under the City’s 467-m program, which seeks to encourage the creation of affordable apartments by grant tax incentives to developers. According the City’s Department of Finance, the assessed value of 55 Broad Street is $31.3 million, and the current tax rate is 12.5 percent. This translates into an overall tax savings of $3.9 million per year, or $27,273 for each of the rent-restricted apartments. It also means that if neither tax rates nor the underlying value of the building increased for the next three decades (both of which scenarios are virtual impossibilities), the developers would accrue a benefit of $117,375,000 in taxes avoided. Assuming (as is much more likely) that both taxes and the value of the building go up in the years ahead, this windfall could jump to the range of a quarter of a billion dollars.
Mr. Silverstein has been a prominent real estate player in Lower Manhattan for decades, best know for acquiring a long-term lease on the World Trade Center complex shortly prior to the terrorist attacks of September 11, 2001, and leading the rebuilding process there. He is also the developer behind 30 Park Place and the owner of 120 Broadway. Mr. Silverstein recently acquired the office tower (converted to residential use in 2013) at 116 John Street from Mr. Berman.
Mr. Berman has been transforming Lower Manhattan office towers for residential use for decades. Among the local properties he has converted are 63 Wall Street, 67 Wall Street, 20 Exchange Place, 70 Pine Street, 443 Greenwich Street, 180 Water Street, 20 Broad Street, and (most recently) the largest-ever such project, at 25 Water Street, which created 1,320 new apartments a few blocks away from 55 Broad Street.
The venture by Mr. Silverstein and Mr. Berman is part of a wave of renewed interest by developers in acquiring Downtown office buildings at distressed prices (driven by the remote-work trend inaugurated by the Covid pandemic) and repurposing them as residential buildings. This is a tide that has washed over Lower Manhattan at least twice before – once in the 1990s and again in the years following the destruction of the World Trade Center. That last wave of conversions was mostly halted by the real estate crisis of 2008, which left multiple buildings (some of them only half-finished) in foreclosure, while other development sites have languished as empty lots for more than a decade. That slowdown was deepened by the economic recession unleashed by the pandemic, starting in 2020.