Office Conversions Shift as NYC Owners Retain 745 Fifth

Owners Opt to Preserve Office Use

Rithm Capital and the von Finck family, co-owners of 745 Fifth Ave., have abandoned a proposed office-to-residential conversion for the Midtown Manhattan tower, according to the Commercial Property Executive. The shift comes as both partners cite high conversion costs and steady demand for office space in the city.

The 565 KSF, 34-story office property will maintain its current use, with owners positioning it to capture demand for high-quality workspace in Manhattan.

Refinancing and Capital Plans

According to Fitch Ratings, the owners are injecting nearly $40M into a $275M refinancing package for 745 Fifth Ave. An additional $25M is earmarked for leasing, capital expenditures, and related expenses. Despite the office portion’s current 37% vacancy, the tower’s retail space, anchored by Bergdorf Goodman, remains fully occupied.

Office Conversions Face Shifting Dynamics

The decision at 745 Fifth Ave. highlights the evolving picture for office conversions in NYC. A CBRE analysis found more office space nationwide is being removed via demolition or conversion, largely to multifamily, than will be delivered through new office construction by end of 2025. Yet, the pace and feasibility of conversions differs market by market. In many cases, declining asset values have made conversions more attractive, prompting a broader shift in investor strategy.

Meanwhile, some investors are exploring retail-to-office conversions, seeking opportunity in repositioning struggling Class B and C retail assets. For now, though, prime office assets like 745 Fifth Ave. are holding their position, signaling confidence in Manhattan’s long-term office fundamentals.