A Midtown office building that failed to find any bidders at auction last year has traded in a landmark sale for its newly rezoned neighborhood.
Marty Burger and Andrew Heiberger paid $25 million for the 85,000-square-foot building at 29 West 35th Street with plans to convert it into 107 studio apartments, the developers announced on Wednesday. The deal was backed by financing from Allegiant and 400CM, with David Levinson of L&L and Terracotta Management joining as equity partners.
The project is among the first office-to-residential conversions in the rezoned corridor in Midtown South, which the City Council approved in August. The rezoning, dubbed the Midtown South Mixed-Use Plan, spans 42 blocks and is expected to yield more than 9,500 housing units.
“We leaned on the fact that it was in the Midtown South rezoning area,” said Colliers’ Zach Redding, whose team represented the special servicer. “When we signed the contract, it hadn’t passed yet, but all signs were pointing toward it working out.”
Redding was joined by other members of the firm’s New York Capital Markets Group, including Dylan Kane and Matt Mastrocola. Ben Schlegel of Ariel Property Advisors represented the developers in the financing deal.
Barry Sternlicht’s LNR took the office building from its owners last September after an auction for the property failed to attract any bidders. The bidding threshold was set at $23 million, which would work out to roughly $270 per square foot — a price lower than the $30 million Paul Sohayegh and Roni Movahedian paid for it in 2007 and significantly below the $80 million they sought for it in 2017.
LNR filed to foreclose on the property in 2022 after Sohayegh and Movahedian defaulted on a $41 million loan. At the time, a referee appointed by a judge in the case estimated that the landlords owed their lender more than $50 million.
The joint venture between Burger’s firm, Infinite Global Real Estate Partners, and Burger’s Buttonwood Development will lean on the 467m tax abatement for the project, which will include 27 affordable apartments priced at around $1,700 a month.
The apartments will range from 475 to 500 square feet with ceiling heights between 11 and 14 feet. Most of the units will include “flexible spaces such as home offices, alcoves or bonus rooms,” according to the press release.
Planned amenities at the building, the conversion of which will be designed by Ismael Leyva Architects, include doormen, a pet washing station and rooftop outfitted with game tables and an outdoor movie screen.
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