W. 35th St. Office-to-Resi Project to Kick Off Midtown Rezoning

A team of developers plans to convert a vacant West 35th Street office building into more than 100 studio apartments, in what appears to be one of the first large projects to take advantage of new Midtown zoning reforms, which are intended to boost housing production.

Infinite Global Real Estate, Buttonwood Development, and 400 Capital Management plan to transform the 12-story building at 29 W. 35th St. into 107 studios. Infinite Global Real Estate CEO Marty Burger and Buttonwood CEO Andrew Heiberger bought the property from LNR Partners for $25 million on Oct. 7, while 400 Capital Management is providing financing.

As first reported by Bloomberg, a total of 27 of these apartments will be deemed affordable, in order to take advantage of the 467-m tax abatement program. Market-rate studios will go for $4,000 a month, while the affordable units will go for $1,701.

The studios will range from 400 to 575 square feet each. The apartment building will reportedly come with perks such as a pet wash station, an outdoor movie screen, and a doorman presence.

The tax abatement lifts a density zoning cap, which limits residential construction, as long as 25 percent of the units in a given development are deemed affordable; this means that they rent to tenants who earn at the weighted average of 80 percent of an area’s “median income,” determined by ZIP code. A total of 5 percent of the building’s units must rent to people making less than 40 percent of an area’s median income, as well.

It certainly appears that the West 35th Street project, 27 out of 107 units deemed affordable, just squeaks past the 25-percent requirement. The tax break is extremely lucrative for developers, and lasts between 25 and 35 years, depending on how quickly developers can get the ball rolling on construction.

The tax abatement is a linchpin of the Midtown South rezoning plan (or Midtown South Mixed-Use Plan), which impacts 42 blocks spanning from West 23rd Street and West 40th Street, between Fifth and Eighth avenues. While technically enacted into law by state legislators up in Albany, developers are reportedly relying on the abatement to get on board with local zoning changes.

The rezoning plan was devised as a means of addressing New York City’s housing crisis—and passed in August after being heavily pushed by Manhattan City Council Members Keith Powers and Erik Bottcher—and intends to bring nearly 10,000 new apartment units to the area, which has swaths of underutilized commercial space.

Any office-to-residential conversion boom will undoubtedly also rely on the separate “City of Yes” zoning overhaul, which changes the office-to-residential conversion cut-off date from 1961 to 1991, meaning that more office buildings erected between those years can be transformed into housing units.

The West 35th Street conversion project echoes Rudin‘s high-profile plans for two of its Manhattan office properties, at 845 Third Ave. and 355 Lexington Ave., even though they don’t fall within the Midtown South zoning area (they’re in Midtown East). Those projects would create more than 500 new apartment units between them.

It appears that Rudin is also attempting to take advantage of the 467-m tax abatement.