Dart Acquires Financial District Office Tower for $252M

Dart Enterprises is buying a 31-story office tower at 175 Water Street, formerly the headquarters of insurance giant AIG, in Manhattan’s Financial District for $252M.

Dart Enterprises is owned by Ken Dart, heir to the Dart Container plastic foam coffee cup fortune, who gave up his US citizenship and moved to the Cayman Islands in 1994.

Vanbarton Group sold the tower, which last traded for $270M in 2019. This week’s deal was marketed by JLL.

AIG sold 175 Water Street to Metro Loft Management in 2019 in a transaction that was financed with a $170M loan from Blackstone Group and a mezzanine loan from Vanbarton.

Metro Loft initially planned to convert the top half of the office tower to residential after AIG’s lease expired in 2021. The developer then decided to renovate the 684F SF office tower with a new lobby and retail pavilion. The developer defaulted on the mezzanine loan earlier this year and Vanbarton took control of the building.

Several buildings in the Water Street area are undergoing office-to-apartment conversions.

Last month, Vanbarton secured a $273M construction loan for the conversion of 160 Water Street, a 24-story, 533K tower that was built in 1972. Brookfield Real Estate Financial Partners provided the loan, with Cushman & Wakefield representing Vanbarton.

The plans for the conversion of 160 Water Street including adding six stories to the building, which will encompass 588 multifamily units. The makeover of the tower will include 34K SF of amenity space, a lobby lounge, a coffee bar and a rooftop deck.

The converted building will be designed by Gensler. Vanbarton bought 160 Water Street in 2014. The last office tenants at the property vacated the building in October.

In May, another office tower in was slated for a multifamily conversion: a partnership between Silverstein Properties and Metro Loft announced plans to convert 55 Broad, a 30-story office building that opened in 1967, into 571 market-rate apartment units.

The conversion to apartments is “the right evolution of these struggling, underperforming older office assets that are approaching their obsolescence,” Nathan Berman, Metro Loft founder and managing principal, told the Wall Street Journal.

Older buildings are becoming candidates for adaptive reuse, and not only because they’re having trouble keeping their office space filled. Structures that were built before the 1970s tend to be more suitable for conversion to apartments because of their floor plans and the amount of natural light they let in.

Modern office buildings—those that are less than 50 years old—tend to have large floors that are not conducive to residential space. Converting newer office buildings to apartments in many cases would require the installation of windows, increasing the cost of an adaptive reuse project.