The new owner of the Flatiron Building, Jeffrey Gural, recently announced his real estate firm, GFP Real Estate LLC, is currently in contract to purchase another office building at 222 Broadway for $150 million, representing a commitment to one post-pandemic strategy re-assessing New York’s corporate real estate.
The renowned Flatiron Building was recently sold to Gural, a previous majority interest holder, at a second auction in May 2023 for $161 million after the original auction’s bidder failed to make a 10% down payment.
Recognizing the challenges posed by current economic conditions, the shift to remote work during the COVID-19 pandemic and declining demand for large office spaces, Gural intends to repurpose the structure into residential units.
Developers and city officials have been drawn to conversions from office buildings to residential real estate with a common goal of reinventing New York’s comeback. Silverstein Properties Inc., one of the city’s leading commercial real estate developers, began a conversion of 55 Broad Street, the former headquarters of The Goldman Sachs Group Inc., in November 2023. New York Mayor Eric Adams launched the Office Conversion Accelerator program in August 2023.
The program comes as housing in New York City has reached a critical point; though the median rent in Manhattan declined 3% in January 2024 from December, it rose 2% year-over-year, marking the 29th consecutive month of market-wide median rent increases.
“It’s unbelievable how much empty office space we have sitting idly by with ready and willing participants to develop the housing and we are in the way,” Adams said. “Well, it’s time to get out of the way so we can turn these office cubicles into nice living quarters.”
Meanwhile, although office vacancy rates have declined to near record lows — 19.2% for the fourth quarter of 2023 compared to 7.9% at the start of the pandemic — recent months have lent hope for a rebound, with a report in January stating New York’s office space demand in 2023 rose to 75% of pre-pandemic demand.
Since 2019, the Flatiron Building’s upper floors have been emptied after Macmillan Publishers vacated, with its features currently undergoing repairs to its façade.
While primarily a commercial area, the Flatiron district is known as one of Manhattan’s most expensive and up and coming areas for residential housing, with luxury high-rises providing doormen and other upscale amenities to those who can afford them.
In October 2023, the Flatiron Building transformation was slated to take three years, with approval from the Department of City Planning set for one year and demolition and construction for two.
The Brodsky Organization, a residential developer, bought a stake in the 22-story, triangular-shaped landmark and is set to lead the conversion process. The awkward space of the building will require some major internal changes to stairs and elevators, but its relatively large number of windows makes it far easier to create residences.
In Gov. Kathy Hochul’s 2024 State of the State address, she underscored her commitment to advancing the next phase of her long-term strategy with a particular emphasis on enhancing housing supply and affordability. Her agenda included proposing legislation to incentivize the construction of new housing, promoting office conversion projects that incorporate affordable housing components and enabling the city to expand floor ratios where appropriate, alongside legalizing existing basement and cellar apartments.
Adams prioritized tackling New York City’s housing shortage through initiatives centered around the “Get Stuff Built” program, along with his vision of a culture of development affirmation embodied through the “City of Yes” zoning reforms via the Department of City Planning.
