# Wall Street's luxe overhaul picking up momentum

## Strip becomes latest hotbed of residential/retail conversion; too few office options?

BY JULIE SATOW

WALL STREET is the new Fifth Avenue. The strip—a historic symbol of global commerce, even though it's only a third of a mile long—is being transformed by lavish apartments and ritzy retailers.

French leather goods designer Hermès is opening a shop across from the New York Stock Exchange, and a BMW dealership has signed a lease for a showroom down the street. Upscale hoteliers, restaurateurs and clothing designers also have linked their exclusive brands to a spate of new luxury condominiums on the block.

"I think every building on Wall Street is a candidate for residential conversion," says Orin Wilf, president of Skyline Developers. His firm is transforming 37 Wall St., the former site of the Trust Company of America, into a 392-unit rental property.

Developers began turning many of lower Manhattan's old commercial buildings into residences a decade ago. In the past year, the pace of conversions on Wall Street itself has picked up momentum. More than one-third of the block's buildings have been made over, and the entire south side from Broad to Water streets is now apartment houses.

### From high finance to high-rises

ARCHITECT Philippe Starck has turned the former headquarters of J.P. Morgan at 23 Wall St. into luxury condos selling for $1,400 a square foot. Giuseppe Cipriani, best known for his eponymous restaurants, is taking his first stab at residential development at 55 Wall St. At 63 Wall St., the former headquarters of Brown Brothers Harriman & Co. has been anointed The Crest, a high-end rental property.

Much of the residential construction has taken place at decades-old buildings that aren't considered attractive by commercial tenants. The conversion movement has grown so strong, however, that even relatively new structures on Wall Street are being turned into residences.

A Class A office tower at 75 Wall St., constructed less than 20 years ago, is slated to become a hotel and condominium development. The

building, which was recently acquired by The Hakimian Organization and Peykar Brothers Realty for $180 million, features the amenities that commercial tenants demand. But with downtown office rents averaging $33 a square foot and condominiums selling for well over $1,000 a square foot, developers make much more money from residential conversions, says partner Rex Hakimian.

More such projects could be coming. J.P. Morgan Chase, which had been trying to find a subtenant for 300,000 square feet that it leases at 95 Wall St., recently took the space off the market. That suggests that the company may have agreed to be bought out by the landlord, which could then revamp the building. The landlord, The Moinian Group—which is converting another office space into residences a few blocks away at 90 Washington St., did not return calls seeking comment. Spokespeople for J.P. Morgan Chase declined to comment.

The most attractive possible address for residential developers is the Beaux-Arts New York Stock Exchange, at 11 Wall St. Many observers believe that it's only a matter of time before the growth in electronic trading makes the NYSE's giant trading floor a relic.

“The stock exchange would

NEW HOUSING STOCK: KEY SITES IN REVAMP

make for a great conversion,” says Skyline's Mr. Wilf.

Some downtown business leaders and landlords worry that the residential conversion boom will go too far. Office tenants that are being priced out of midtown, where rents are reaching all-time highs, may be willing to look at cheaper alternatives downtown. But the more commercial space in lower Manhattan is converted, the greater the chance that tenants will look across the Hudson River or to Westchester.

### Downtown's "desperate need"

"RESIDENTIAL CONVERSIONS" and the aging population of existing office buildings have left downtown in desperate need of new space that can attract the big aircraft carriers of the tenant world," says Kent Swig, a major downtown landlord. "New York cannot claim to be a major financial capital when its

office space is being depleted."

However, the trend toward residential conversions and the resulting drain on office space could prove a boon for the commercial future of key downtown areas. Some office buildings are fortifying their standing in the belief that they will benefit from the diminished supply. At 14 Wall St., for example, developer Leviev Boymelgum is marketing six floors of commercial office condos.

The reduced office space also could help occupancy rates at Ground Zero, where an estimated 10 million square feet is scheduled to come on line over the next decade.

"For those companies looking to move downtown, any competitive space that is taken off the market makes Ground Zero more valuable," says Eric Deutsche, president of the Alliance for Downtown New York.

COMMENTS? jSatow@crain.com

BY JULIE SATOW

“The stock exchange would

COMMENTS? jSatow@crain.com