Watermark Capital Secures $125M For Brooklyn Adaptive Reuse
Upon completion, the former office building will feature rental and condo units.
Bravo Property Trust and Integritas Capital have originated a $125 million senior construction loan for an office-to-residential conversion in Brooklyn, N.Y. Watermark Capital Group owns the 204,000-square-foot property at 175 Pearl St., according to Yardi Matrix data.
The developer acquired the asset for $66.5 million last May from Cannon Hill Partners, the same source shows. BridgeCity Capital issued a $59 million acquisition loan.
Watermark Capital Group will convert the 1918-built, eight-story office building into multifamily. In exchange for reserving 25 percent of units for low-income renters, the project will benefit from the 467m abatement program, granting tax exemption for 35 years.
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Atop the converted building, the developer will construct an 11-story condominium component, bringing the project to a total of 19 stories. The multifamily and condo portions will each feature their own amenities, including lounges, an outdoor space area and a gym.
The soon-to-be-converted office building is at the border between Dumbo and downtown Brooklyn, near the F, A and C subway lines that connect to Manhattan.
CommercialEdge’s Conversion Feasibility Index—a feature that grades the adaptive reuse potential of office buildings—places 175 Pearl St.’s score at 92, making it a top candidate for conversion. The index accounts for multiple variables, such as floorplates, location, ceiling height and age, among other factors.
To put it into perspective, only 16.8 percent of Manhattan’s entire office inventory had a CFI score of 90 or higher, as of July 2024, according to CommercialEdge. However, the figure rises to 36.3 percent if we are to include buildings with a CFI score of 75 and up.
New York programs boost conversions
Through various government incentives—such as the 467m tax abatement program and the Office Conversion Accelerator Program, as well as the City of Yes—the Big Apple’s office-to-residential adaptive reuse pipeline grew 59 percent year-over-year through February, clocking in at 8,310 units underway, Yardi Matrix data shows.
One of the largest NYC residential conversions is the adaptive reuse of 55 Broad St. into a 571-unit community. Silverstein Properties and Metro Loft developed the property, while CetraRuddy provided design services.
