Picture yourself living high above the heart of Midtown, mere blocks from the Chrysler Building and the United Nations – your 21st story bedroom window offering sweeping views of the cityscape leading north to Central Park and beyond.
There’s just one minor detail: The apartment nearly collapsed before you moved in, sparking the mass evacuation of not just the building, but a large swath of the neighborhood, after workers spotted key structural columns bending under the weight of the newly constructed floors above.
It’s a real-life scenario for whoever moves into portions of the former Pfizer headquarters at 235 East 42nd St., where columns buckled on Tuesday, leaving a multi-story section of the building sagging above 43rd Street.
“This project will definitely have a stigma,” said Ross Spivak, CEO of the firm RES Consulting NY. “You’re talking a significant structural failure.”
Gothamist spoke with a half dozen developers, brokers, engineers and construction experts whose views differed on the impact the near-catastrophe will have on future leasing. But most agreed the bigger problem is whether the project — worth hundreds of millions of dollars — will continue to be financially viable if it takes too long to correct the problems and get tenants in the door.
Every month of construction is extremely expensive.
Spivak, who advises construction companies and developers, said even safety approvals from the city’s building department won’t be enough to squash lingering suspicions among some potential renters.
“They may say it’s fine, but do you still think it’s fine?" Spivak said. “When there are structural failures or any serious issues, it makes people think.”
But hardened real estate brokers disagreed. The allure of a place to live in the five boroughs is too great a force to dampen a New Yorker’s spirits in the quest for an apartment.
“We have such a tight housing supply, people are willing to live in spaces after a well documented problem goes away,” said Douglas Wagner, director of brokerage services at Bond New York. “By the time the developer completes the rental units, so much time will have passed it won't be as dramatic a moment as it is today.”
Just 1.4% of New York City apartments are vacant and available to rent, according to the city’s most recent housing survey — a 58-year low that is driving record-high rents.
Louis Adler, co-founder of the brokerage REAL New York, said he doesn’t expect it to have an effect on future leasing. But he said there could be serious financial consequences for the owners, MetroLoft and David Werner Real Estate Investments, which took out a $720 million loan to complete the city’s largest office conversion project.
“The bigger threat is that every month of construction is extremely expensive,” Adler said. “Who knows how long this pushes it out?”
Madison Capital Realty, which made the $720 million construction loan, did not respond to a request for comment.
Any delay is going to hurt them financially.
The project is the largest office-to-housing conversion in New York City and was expected to open to tenants next year. The owners will have to keep making loan payments, without generating any revenue from rent payments as early as they expected if the development stalls, said Brooklyn-based real estate developer Eli Lever.
“The most expensive thing is the interest carry on the loan,” Lever said. “That’s a tremendous loan on this project.”
MetroLoft Managing Director Mitchell Wasser said in a written statement that the company plans to “fully rebuild” a portion of the building above the broken structural columns.
“We remain on schedule, and this work will not delay delivery of the building as it is such a small portion of the project,” Wasser said. “We are working around the clock so that operations can resume and life in the area can return to normal.”
A spokesperson declined to comment on what rebuilding the portion of the building will actually entail and whether the building will face future stigma. MetroLoft specializes in office conversion projects and has completed more than a dozen in recent years, according to its website.
MetroLoft founder Nathan Berman has described the structural problem as a “typical construction mishap” in interviews with the New York Times and Wall Street Journal. He declined interview requests from Gothamist.
But Peter Varsalona, principal at RAND Engineering & Architecture, disagreed with Berman’s characterization of events and his forecast for what lies ahead.
“There are attempts to downplay this and spin this as a ‘typical construction mishap,’” Varsalona said. “This is nowhere near that. It is a major blunder.”
Varsalona, a licensed engineer and architect who has worked on other office conversions, said emergency shoring, renovations and city approvals could “stretch out for months,” delaying construction beyond the projected timeline.
“Any delay is going to hurt them financially, rather significantly,” Varsalona said.
Department of City Planning data shows property owners have sought approval to convert 44 different office buildings in New York City since 2020. Ten completed projects have resulted in roughly 4,200 apartments and condos, with nearly 14,000 more planned.
Lever, the developer, said the problem could scare lenders away from other office conversion projects, which are considered relatively safe investments that are faster than ground-up construction.
“Now people are like, ‘Oh wait are these legit?” Lever said.
But, he added, if developers build it, renters will come.
“People will say, ‘I’ll never move in there,’” Lever said. “But there’s so much demand.”
