By Konrad Putzier
Midtown South’s office boom has so far bypassed the Bowery, a street more associated with grunge music than tech firms. But that could change.
Westchester-based Caspi Development is in contract to buy the seven-story office building 161 Bowery for $12.75 million, with plans of turning it into modern office space for tech tenants. It would be the first such building on the street.
Principal Joshua Caspi told Real Estate Weekly he plans to renovate the 20,000-s/f building – located between Broome and Delancey Streets – and create full-floor office lofts atop the ground-floor retail space.
“Our goal is to lure high-end tech tenants. We are planning to come off the heels of 245 West 17th Street or 40 Thompson Street and create a boutique version of these buildings,” Caspi explained, referring to two Midtown-South office buildings popular with tech firms.
Mid-way to gentrified, the notoriously disheveled Bowery has recently seen several restaurants, galleries and hotels open. Caspi said he feels this change will help attract tech tenants, who tend to place greater emphasis on an area’s livability. One widely cited reason why firms like Google, IBM and Tumblr settled in Midtown South is that the area offers more bars and restaurants than Midtown or the Financial District.
If other developers follow suit, the Bowery could emerge as a destination for the services sector. But Michael DeCheser, vice president of sales at Massey Knakal and a specialist on the Lower East Side and Chinatown, is skeptical.
He explained that zoning on the Bowery allows developers to convert office buildings into residential space, which currently offers much higher returns. This, he said, makes it more likely that the street’s aging, largely owner-occupied office buildings will be turned into condos or rentals than into modern office space, although he conceded that lower renovation costs may make office space the better choice in certain cases.
“There is more demand for residential. Therefore, it’s easier and more lucrative to build residential. And residential is easier to finance,” DeCheser noted.
Caspi, for his part, believes that high-class office space can generate similar rents as residential, while avoiding an onerous and costly conversion process.
“I feel that business will want to have access to all that is ongoing in the Bowery and the inventory of office space of this type is slim to none,” he said. “As a result we are creating our own market.”
Caspi Development recently partnered up with Washington-based real-estate investment fund Artemis Real Estate Partners and has plans to invest big in New York City. The company developed the Clinton Hill rental 93 Waverly and a 150,000 s/f office complex at 120 Bloomingdale Road in White Plains. Caspi said the former Nestle headquarters is currently 99 percent leased.