Rudin Pursuing Two East Side Office-to-Resi Conversions

Real estate behemoth Rudin Management is pursuing office-to-residential conversions of two of its Midtown buildings, according to separate plans filed with the city’s Department of Buildings this month.

The first is 845 Third Avenue, a 21-story building located between East 51st and East 52nd Sts. Records indicate that its 34 commercial units are currently being used by businesses such as Vector Media Group, K2 Intelligence, and Mezeh Mediterranean Grill. It also houses the South African consulate.

According to permits, Rudin wants to spend $41.7 million to transform the building into a 411-unit residential tower, which will reportedly be composed of a mix of affordable and market-rate apartments. According to Crain’s New York Business, the conversion would come with a variety of tony perks: gym, spa, and co-working space. There would also be 9,100 square feet of ground-level retail space.

The second building that Rudin intends to convert is 355 Lexington Ave., which tops out at 22 stories and is located between East 40th and East 41st Sts. The developer wants to extend the building’s height to 26 stories during the conversion, which would create 297 apartment units. It would cost about $32,051,190 to do so, as per an estimate in permits filed with the DOB.

As of now, the 65-year-old Lexington Avenue building includes 30 commercial units. They’re occupied by tenants such as the real-estate advisory group Leviathan Capital, as well as the dyslexia-treatment company Lindamood–Bell and the construction consultants Linesight.

The news that Rudin was interested in converting the Lexington Avenue building was broken by The Commercial Observer back in February, although the company only officially filed permits to do so this month. The developer reportedly began telling commercial tenants to start making plans to move out earlier this year.

Back in the 1970s, 355 Lexington Ave. housed the office for the Soviet Union’s official trade representative to the United States, Amtorg Trading Corporation. The building has been owned by Rudin, a private company, since it was built in 1959. Rudin also built 845 Third Ave., back in 1963.

Rudin Management was founded by Samuel Rudin and his siblings in 1925, and passed the company to his sons Jack and Lewis by 1975. It is currently run by William and Eric Rudin, plus Samantha Rudin Earls and Michael Rudin, the fourth generation of the family to do so. At the peak of the company’s empire, around when Lewis Rudin died in 2001, they oversaw 40 buildings around NYC—16 office towers and 22 residential buildings—and were valued at around $2 billion.

According to the company, it currently maintains a portfolio of 17 residential buildings and 14 office buildings—although those scales could tip if the proposed Midtown conversions go through. It’s unclear what the total value of the company’s assets are now.

Rudin is likely attempting to capitalize on the 467-m tax incentive via the conversions, which lifts a density zoning cap (allowing for more residential construction) as long as 25 percent of new units are deemed affordable, which rent to tenants at the weighted average of 80 percent of an area’s “median income.” The ZIP code containing 845 Third Ave. has a median income of $171,038, while the one containing 355 Lexington Ave. has a median income of just over $140,000.

The tax incentive provides a 90-percent tax break for each building, as they’re below 96th Street in Manhattan, and would last between 25 and 35 years. To qualify for the maximum-length tax break, Rudin will need to start construction on the conversions by next year.