Developer That Bought Catholic Archdiocese HQ Is Latest in Growing Office-to-Housing Trend

Vanbarton Group paid $103 million to the Roman Catholic Archdiocese of New York for its HQ building at 1011 First Ave., financed by a $250 million loan from Eldridge Financial Corp.

The deal announced in mid-July is part of the accelerating trend of office-to-housing conversions sweeping the city.

The plan is for a quarter of the 420 residential units to be affordable housing. The builder is taking advantage of a 485X tax break that will allow it to add six more floors to the current 20-story tower.

Vanbarton has specialized in office-to-housing conversions in the past.

“The addition of 1011 First Avenue to our portfolio marks a significant step in expanding our office-to-residential conversion efforts, building on the success of nearly two decades of converting underutilized real estate,” said Joey Chilelli, principal at Vanbarton Group, at the time of the sale. Among its other conversions are 180 Water St. and the boutique conversion of the Howell, a former hotel that now has 137 apartments in the financial district. It has also agreed to purchase 77 Water St. for $95 million and build 600 apartments and has fully leased virtually all of the 588 residential units in Pearl House at 160 Water St., in the financial district.

The archdiocese, meanwhile, moved its HQ into rental property on Madison Avenue, downsizing to about 20,000 square feet from its former 40,000 square feet. The lease is for 20 years. Cardinal Timothy Dolan blessed the new facility at 488 Madison Ave., across the street from St. Patrick’s Cathedral.

In a twist, the rental building stands on land that was once owned by the archdiocese and housed a high school and an orphanage.

“Isn’t it magnificent that we look out at St. Patrick’s Cathedral,” Cardinal Dolan said at the dedication in June. “This has been since the time of John Joseph Hughes, the first archbishop of New York, a time when he decided to move St. Patrick’s, which has always been a kind of center of the Church’s presence. And we continue that tradition.” (The original St. Patrick’s is now Basilica of St. Patrick’s Old Cathedral and is down on Mulberry Street.)

The archdiocese is one of the city’s biggest land owners, but since most of its land sits beneath churches and a dwindling number of parish schools, it is not a liquid asset. The archdiocese has been taking measures to control costs and shore up its financing, and rumors have swirled that many of the churches shut down in recent years will be sold off to developers.

The sale that closed in July is the second nine-figure divestment for the archdiocese in just over a year and a half. It sold St. Patrick’s Cathedral’s air rights in December 2023 for up to $164 million to a group of investors that includes Citadel, the hedge fund run by billionaire Ken Griffin, and real estate giant Vornado, headed by Steve Roth, in consultation with Rudin Management.

The plan is to use the air rights to develop a skyscraper tower that is being built at 350 Park Ave. near Grand Central, but that project is a pure office-space deal. Citadel itself plans to become an anchor tenant in the building.

Most of the office-to-home conversions in Manhattan are concentrated downtown. At the moment, the title of tallest conversion belongs to the SoMA [South Manhattan] building at 25 Water St., in the Financial District, which began renting the 1,320 units in the 32-story building in January. The building offers amenities including a gym, indoor and outdoor pools, and a two-lane bowling alley.

SoMa previously housed JPMorgan Chase, the National Enquirer, and the New York Daily News. It was co-developed by GFP Real Estate and Metro Loft, along with Rockwood Capital. The project recently concluded an affordable-housing lottery for people making between $31,955 and $173,340 for 300 of the 1,320 units in the building.

The 1011 site that Vanbarton is developing will be big, but even with the extra six stories, it will not even be the largest office-to-housing conversion on the UES. That belongs to the two adjoined buildings at 235 E. 42nd St., between Second and Third avenues, that once housed the HQ of drug maker Pfizer, which moved into a new HQ in Hudson Yards. The pharmaceutical giant sold the two buildings to Metro Loft and David Werner Real Estate, which plan to build 1,500 rental units. The plan calls for leasing to start in 2026 with first renters moving in during 2027. When it is done, it will be the largest office-to-residential conversion in the country.

Writing in a recent op ed in the Daily News, city Planning Commissioner Dan Garodnick and Justin Brannan, the Brooklyn City Council member who chairs the finance committee, said more conversions will happen now that the Council has passed the “City of Yes” bill. It was a sweeping overhaul of zoning rules Mayor Eric Adams had pushed and which the Council endorsed, which among other planks made it easier to convert office towers to residential.

“Conversions alone are not a silver bullet for the housing crisis, but they are an important part of the solution, and the blueprint is real,” Garodnick and Brannan wrote. “Now we need to scale it with speed and discipline.”