AUDASE

Another Financial District Building Converts to Residential
By JULIE SATOW NY TIMES

JOHN STREET, a narrow sliver that runs just eight blocks from Broadway to the South Street Seaport, has been the site of a large number of the office-to-residential conversions in the financial district. Now, one of its last remaining office towers has been tapped to become a rental building.

The circa-1930 high-rise at 116 John Street, at the corner of Pearl Street, will become 418 new rental apartments that are expected to start leasing next year. Metro Loft Management, which acquired the building through a joint venture with the current owner, Hacienda Intercontinental Realty, will renovate the building in phases.

About 40 percent of the 350,000-square-foot 35-story building still has office tenants, although the developer is hoping that most of them will leave over the next six months. Some of the occupants have leases that do not expire until 2017, “but with minor incentives from us,” said Nathan Berman, a principal at Metro Loft, “most tenants are finding that now is an opportune time to seek out new office space, since the market is still soft and they can get a good deal and enter into long-term leases.” For those tenants who do not vacate, the developer will renovate around them.

Avinash K. Malhotra Architects, which was behind the nearby rental project at 2 Gold Street, will oversee the roughly $100 million renovation, which will be evenly divided among studios, one-bedrooms and two-bedrooms, with a handful of three-bedrooms mixed in. Amenities will include full-time doormen, a concierge, a rooftop recreation area, a lounge and two gyms.

The pricing will be in line with that of other luxury rentals in the area. Jeremiah LoRusso, a managing director of New York Living Solutions, a residential brokerage that has an office at 90 John Street, says monthly rents in the area average $2,000 for a studio; $2,575 for a one-bedroom; $3,600 for a two-bedroom and upwards of $5,500 for a three-bedroom.

Along John Street, once known as Insurance Row, many of the older office buildings have been converted to rentals and condominiums over the last 15 years.

“These older Art Deco buildings outgrew their use as offices but work well as condominiums or rentals,” said Laurie A. Grasso, a partner in the law firm Herrick, Feinstein. She has worked on several conversions nearby with Metro Loft, including 20 Exchange Place, 63 Wall Street and 67 Wall Street, in addition to 116 John Street. “There are other rentals on John Street,” Ms. Grasso said, “but they were converted years ago and so don’t pose a serious competition.”

Among the rentals are 85 John Street, converted in 2001, and 100 John Street, converted in 1998. At 85 John, a studio was renting for $2,450, according to the landlord’s Web site. At 100 John, a three-bedroom was renting for $3,100, according to Streeteasy.com. Another building, 17 John Street, one of Metro Loft’s first projects, was converted in 1999. Those buildings are either fully leased or nearly so, brokers said.

The recently opened Frank Gehry-designed tower at 8 Spruce Street will add some 900 rental units to the area’s inventory. With studios starting at $2,630, “the price point is more on par with the luxury condominiums in the area than the rentals,” said Jackie Chan-Brown, a senior associate broker at CitiHabitats.

Still, Mr. Berman of Metro Loft said, “I believe that the financial district can handle several thousand more rental units without a problem, given the demand and the fact that we have a vacancy rate of below 1 percent in our portfolio of buildings.

“Considering that this area has apartments that are the least expensive in terms of price per square foot, yet offer superior transportation and all of the amenities you get in a white-glove building on the Upper East Side, I see no shortage of demand.”