Permit Sought To Convert Office Tower

EDITOR'S NOTE: Since this story was written, the owner of 401 Broadway changed his plans to convert the building to residential use and has, instead, chosen to upgrade it as a commercial building.

By Carl Glassman and I-Ching Ng
POSTED OCT. 2, 2006

The 29-story tower at 401 Broadway is an anomaly in Tribeca and, increasingly, a scarce commodity in Lower Manhattan. It is an office building.

Not an office building like the corporate behemoths planned for the World Trade Center site, or the ones where large, fancy Wall Street firms do business. The 1930 building, just south of Canal Street at Broadway and Walker Street, is a collection of tiny to medium-size office spaces filled with independent professionals—the majority of them lawyers, with a smattering of accountants, acupuncturists, dentists and freight expediters. The Tribeca Trib is also a tenant in the building. Most offices in the building, which is located on the edge of Chinatown and near the U.S. Immigration and Naturalization Service, cater to the Chinese immigrant community. “When Chinese people get off the airplane they know to find an attorney at 401 Broadway,” said Frank Liu, a lawyer in the building. “You need an attorney? Go to 401 Broadway.”

“For my countrymen, it is a ‘one-stop’ shop to find good lawyers,” said Dilly Shek, chairman of the Fukien (Fukinese) American Association. “They can just go in and choose from the hundreds of Chinese immigration lawyers there.”

But not for long, the building’s owner hopes. Like so many commercial buildings in Lower Manhattan, 401 Broadway is headed for residential conversion. Owner Albert Russo is seeking city permission to convert the building, with its sweeping upper-floor views, into 90 condominium apartments. Current zoning for the area prohibits residential conversion of buildings over 5,000 square feet.

I“We were advised that we should pursue this plan,” said Russo, whose family has co-owned or owned the building since 1981. “Part of it is a business decision. And we like the idea.”

As an office building, 401 Broadway has been profitable. Last year, following a long legal dispute with an ownership partner, the Russo family took full possession of 401 Broadway at auction. According to papers submitted to bidders, the building was projected to finish the year with a net profit of $2.5 million on a gross income of $6.8 million. The document said 60 percent of the tenants had month-to-month leases, and none went beyond 2009.

Russo, whose building is in the Tribeca East Historic District, is taking advantage of a variance process that provides an incentive for owners like him to restore their buildings. In return for a thorough restoration approved by the Landmarks Preservation Commission, the Department of City Planning grants the owner an exemption from zoning restrictions.

Last month, Community Board 1 voted its advisory approval for most of the restoration. (The Landmarks Commission later requested modifications to the plan.)

But CB1 has yet to weigh in on the change of use from commercial to residential. Following a presentation by Russo’s architect, Shael Shapiro, to CB1’s Landmarks Committee last month, there was a hint of what may lie ahead. Some on the committee questioned whether the loss of office space, in exchange for a beautifully restored 76-year-old building, was worth it.

“There are very few buildings like this in Tribeca where you can put small businesses,” said committee member Tim Lannan. “I think it’s a great restoration and I don’t think it should be converted.”

Leaders in the Chinese-speaking community worry about the impact on their constituents if 401 Broadway, now nearly 90 percent occupied, is converted.

Shek said it will be hard for Chinese immigrants with limited English skills to seek help from American attorneys in the nearby office buildings along Broadway. Worse still, he worries that the Chinese lawyers will move their offices uptown or farther away to service Chinese communities in Queens or Brooklyn. “For those with language barriers in Chinatown, they really have no other places to go,” he said.

Margaret Chin, deputy executive director of Asian Americans For Equality, said she feared that the building’s closing would not only “destroy” important community services, but also hurt Chinatown’s economy. “The new residential tenants are not likely to be around during the day and patronize the stores and restaurants nearby,” she said.

The trend toward converting offices to apartments in Lower Manhattan has been dramatic. Below Chambers Street, 12 million square feet of office space has been converted to residential use since September 2001, according to the Alliance for Downtown New York. Vacancy rates in Class “B” and “C’ office buildings are at about 10 and 11 percent, respectively, the report says.

In Tribeca, few office buildings remain to convert. Last month, as the owner of 401 Broadway began the process, the $115 million sale of 443-453 Greenwich Street was announced.

The three-quarter-block long twin buildings, seven-stories high and more than 217,000 square feet, house a warren of small office spaces. Most are rented to independent film producers, writers and others in film-related businesses. According to a press release issued by the seller, the building—“one of the last remaining crown jewels in Tribeca”—was particularly attractive because all leases expire within the next three years. “Which means,” the selling agent was quoted in the release as saying,  “a residential conversion could materialize fairly swiftly if market conditions are still optimal for that use.” A hotel is also said to be under consideration.

“You will not be able to find this anywhere else, and it’s just very sad,” said Debbie Johnson, the general manager of Greenstreet Productions, which has two floors in the building and sublets small offices to others doing film-related work.

In response to a trend that many see as harmful to small businesses, the city’s Economic Development Corp. has commissioned Cushman & Wakefield to conduct a study of affordable office space, according to Andrew Brent, an EDC spokesman. In a statement e-mailed to the Trib, Brent said the city wants to determine whether “there are appropriate measures” that should be taken to ensure that the city retains the “optimal amount” of office space for small businesses.

The difficulty of finding such space was underscored in recent months when tenants of buildings condemned for the construction of the Fulton Transit Center protested their lack of options in the area.

“We have to keep this type of office space Downtown,” Councilman Alan Gerson said in a telephone interview. “We are losing it rapidly.”

Gerson said he did not favor a zoning variance for 401 Broadway, and that he intended to press the point with Amanda Burden, chairwoman of the City Planning Commission, and Robert Tierney, chairman of the Landmarks Preservation Commission. “Part of a well-rounded community has to be the kinds of businesses provided by this type of office building,” Gerson said.

For many tenants in 401 Broadway, staying put is a matter of practicality and economics. Zhongyue Zhang rented his office 18 years ago because of its “prime location.” He can escort his clients to the nearby courthouses and INS office for hearings. Zhang said he could not afford other nearby offices he has seen.

“New office spaces along Broadway are saturated already,” said Zhang. “I want to stay in this neighborhood but I really don’t know where to go.”