Marty Burger thought the Garment District could be an excellent setting for his second act.
Burger, as soon as the CEO of megadeveloper Silverstein Properties, partnered with former City Residential honcho Andrew Heiberger to amass a 12-story constructing, subsequent to an Irish pub and some doorways down from a parking storage.
The builders figured they’d flip the unloved workplace construction at 29 West thirty fifth Avenue right into a 107-unit condo complicated outfitted with a rooftop film display screen for tenants.
Earlier than the duo might create their city oasis blocks from Penn Station, town’s Midtown South rezoning, remodeling 42 blocks in central Manhattan into 10,000 models of housing, wanted to cross.
“We put the property beneath contract and made the guess [the rezoning] was going to undergo,” Burger mentioned.
The Metropolis Council handed the change final August, and the constructing sale closed in October. Its models accounted for 1 p.c of the neighborhood’s housing purpose.
“It really went via faster than we thought,” Burger added.
Brokers and builders turned their eyes to the realm. May Herald Sq. develop into the subsequent Dimes Sq.? Would New York’s media elite provide you with a nickname for younger girls of the Garment District?
“We get a name daily from individuals who say ‘I noticed 29 West thirty fifth Avenue. We’ve received a mission at X [West] thirty sixth Avenue and thirty fourth Avenue and thirty seventh Avenue,’” Burger mentioned. “I don’t know if folks simply wakened, however the Midtown South [rezoning] appears to have spurred a variety of exercise.”
Dealer buzz and good vibes, nevertheless, haven’t translated into gross sales. To this point, the pile of plans for ground-up development or tear downs is slim. But it surely might develop: Inquiries and talks with landlords of getting older workplace buildings are rising, sources mentioned.
9 months after passage, builders scouting within the space say the rezoning doesn’t resolve the trade’s underlying math downside due to development prices and tight margins. Multifamily tasks with greater than 100 models of multifamily spur larger wage necessities beneath 485x, a state tax program builders lean on for tax incentives. These lower into revenue margins. So does ready for longtime present tenants to maneuver out.
“The ocean change that the rezoning of Midtown South must be bringing about by way of new developments is hampered by the prevailing wage requirement of 485x,” mentioned Michael Cohen of Williams Equities, which owns workplace buildings in Midtown South.
If 485x is a minus within the developer’s math equation, a tax break for workplace to residential conversions, generally known as 467m, is a plus. Probably sufficient of a plus to get extra improvement going.
“You wouldn’t have the ability to construct this with out 467m,” Burger mentioned of his mission. “The numbers simply wouldn’t work.”
Time warp
Midtown South spans over 42 blocks. At its coronary heart is the Garment District. The neighborhood, between Fifth Avenue and Ninth Avenue, from West thirty fourth to forty second Streets, consists of buildings designed for town’s apparel-manufacturing companies a century in the past.
In 1987, town additional restricted choices. In an try to mitigate the trade’s decline and jobs leaving town, it handed an ordinance requiring house owners to protect house for garment producers.
However zoning couldn’t defeat the forces of globalization, and vogue and manufacturing jobs continued to go away town and the U.S. In 2018, Mayor Invoice De Blasio lifted some restrictions however didn’t take away the housing ban. Finally, in 2024, Mayor Eric Adams’ Metropolis of Sure laws cleared the way in which for brand spanking new, denser housing with one key change: Ground-area ratios elevated from 12 to as much as 18. Lower than a 12 months later, the Midtown South rezoning handed the Metropolis Council unanimously, although with last-minute carveouts stopping residential use on sure blocks.
“It simply touches so many neighborhoods.”
The geography is advantageous: east of Herald Sq., west of Murray Hill, north of NoMad, south of Bryant Park and near Hudson Yards. “What’s nice about the place we’re is it simply touches so many neighborhoods,” Burger mentioned.
However the political slow-walking had a hangover. The Garment District’s workplace buildings are dated, with some hanging on by a thread by way of upkeep or financials. But some tenants want their dilapidated buildings with asking rents of $60.49 per sq. foot, in line with Colliers, half what they’d pay in a trophy workplace in Hudson Yards.
At Burger and Heiberger’s conversion, the workplace tenants had already vacated, aside from a restaurant lease, which expired earlier this 12 months.
“A whole lot of these different buildings have present tenants,” mentioned Burger. “They must do away with and cope with. So it’s not as quick a plan.”
Sale bin
The constructing at 29 West thirty fifth Avenue fell into misery in the course of the pandemic. Barry Sternlicht’s Starwood Property Trust launched a foreclosures public sale in early 2022, alleging the proprietor defaulted on its $41 million mortgage. Starwood acquired the property in a $23 million credit score bid after no bidders confirmed up at a foreclosures.
Starwood, via a particular servicer, struck a cope with Heiberger and Burger for the property. Discovering debt financing was simple. The fairness was a problem, nevertheless, due to Zohran Mamdani’s victory within the Democratic major, Burger mentioned.
“A whole lot of institutional traders red-lined New York to determine what was going to occur with the election,” mentioned Burger.
However the constructing had engaging options for a conversion. There was no want to attend till tenants’ leases expired and conversion might begin as quickly because the rezoning handed. David Levinson of L&L and Terracotta Administration joined as fairness companions and the sale closed in October 2025 for $25 million, or $294 per sq. foot. Of the 107 models, 27 shall be designated as reasonably priced with rents at about $1,700 per 30 days.
The 467m tax break permits Heiberger and Burger to keep away from paying property taxes for as much as three years, whereas the mission is beneath development, which has been essential. After that, the break offers house owners a 90 p.c exemption for 30 years if 1 / 4 of the models are reasonably priced. If Heiberger and Burger owned the constructing the remainder of their lives, they might solely owe a couple of tenth of the property taxes of comparable residential buildings within the metropolis. Along with tax breaks, Burger’s different benefit is the pace through which conversions will be accomplished. Burger expects his constructing to be open by subsequent June.
“The entire mission, we must be in for beneath $1,000 a foot once we’re executed, perhaps even much less,” mentioned Burger. “Our foundation goes to be nice, and our timing goes to be a lot faster than if we needed to construct floor up.”
Dawn of residential
Burger’s conversion might be the primary domino.
Howard Rabner of Ariel Property Advisors is itemizing a small workplace construction simply behind it, at 34 West thirty sixth Avenue. The constructing is simply six tales and 11,000 sq. toes. However he’s getting inquiries from patrons eyeing conversions.
“These constructing house owners say, ‘You understand what, I’m not going to get high greenback within the hire, however there might be a chance to go residential and benefit from every part else round me, and particularly that block,’” Rabner mentioned.
He has seen 10 trades in Midtown South prior to now 12 months and thinks the tempo might choose up.
Rabner attracts parallels to the Midtown East rezoning in 2017, which incentivized builders to construct new trendy workplace towers, particularly by way of timeline. JP Morgan’s colossal headquarters tower at 270 Park Avenue was the primary and largest workplace constructed beneath the rezoning. The tower was completed eight years after the rezoning handed.
The rezoning “was seen as long run since you had lengthy leases and you’ve got house owners that know they’ll’t do something within the brief time period,” Rabner mentioned. “However 10 to fifteen years down the street, you can begin seeing it occur.”
In Midtown South, a minimum of two builders have already pitched ground-up residential developments. Notably, Jack Yadidi filed plans with town in March for a 32-story tower at 30 West thirty seventh Avenue, demolishing an present two-story construction.
To this point, few have benefited extra from the Midtown South rezoning than Richard Coles’ Vanbarton Group. The developer owns a coveted website in NoMad at 3 West twenty ninth Avenue. It abuts Marble Collegiate Church, led for many years by Dr. Norman Vincent Peale, greatest recognized for his ebook, “The Energy of Highly effective Pondering,” and celeb attendance. (President Trump married his first spouse, Ivana, at Marble Collegiate.)
Earlier than the rezoning, an workplace improvement appeared possible. HFZ Capital had as soon as deliberate to construct a 34-story workplace tower earlier than shedding the property to foreclosures in 2021.
“You return and also you Google that website, you’ll see it was going to be an workplace then life science then it was going to be a lodge,” Coles mentioned throughout The Actual Deal’s Salon Collection in January. “In the meantime, throughout this complete journey, we had been considering, ‘God, if it might solely be residential.’”
