Silverstein Properties is looking to raise a $1.5 billion fund to convert office towers into apartment buildings as the office market continues to suffer. CEO Marty Burger said in a recent interview that the fund could just be the start, and Silverstein sees a $10-billion-plus opportunity in office-to-residential conversions in New York City and other major U.S. cities.
Eastdil Secured will be Silverstein’s fundraising advisor, targeting Manhattan offices with high vacancy rates and piled-up debt. Silverstein, one of New York’s most prominent office developers, is also looking beyond NYC to cities where offices are struggling, like Boston, Washington, D.C., and cities on the West Coast. Burger said it’s a perfect time for the conversions fund with the office not in favor and a hot residential market.
Silverstein has already started the office conversions strategy, acquiring a 30-story office property at 55 Broad Street in Manhattan earlier this year. Metro Loft is the real estate firm’s partner on the project and is a leader in NYC building conversions, having redeveloped 5 million square feet of former commercial buildings into residential properties. Office conversions are expensive and can be challenging to pull off, but the appetite for these projects is steadily growing. And with a big-name office developer like Silverstein jumping head-first into this strategy, it’s a likely sign that other real estate firms will follow suit.