How $203M in Times Square Becomes a Blueprint for America

The office market as we knew it is gone. Remote work killed it. The pandemic accelerated it. Now capital is repricing office buildings into apartments. Yellowstone secured $203M to convert a 221,000 sq ft office building at 220 West 42nd Street in Times Square into 176 apartments, including 44 affordable units and 18,000 sq ft of retail. Financing includes $36M mezzanine from Naftali Credit Partners and main debt from Bank Hapoalim (U.S. lending arm), arranged by IPA's Capital Markets. The property was acquired in 2022 via deed-in-lieu of foreclosure for $161.1M, down from EPIC's $261M purchase in 2012.This deal is part of a massive national trend. At the start of 2026, 90,300 apartments are under construction through office conversions, a 28% increase year-over-year and 291% increase since 2022. Office conversions now represent 47% of all adaptive reuse projects. NYC leads with 16,400 units in pipeline. Washington D.C., Chicago, Los Angeles, Dallas, Philadelphia, and Denver are all converting office to residential. National office vacancy is 17.6%, with eight top-25 markets above 20%. Austin at 24.6%, San Francisco at 24.2%.Multifamily vacancy is 4.8% vs office at 19%. Multifamily rents up 21.3% since 2020, office rents up only 1.4%. Over 81 million sq ft of office space in conversion pipeline, 75% planned for multifamily. Fewer than 20% of office properties suit residential conversion. Conversions cost 20-30% less than new construction. RXR converting 1.1M sq ft into 1,250 units. Broad Street Development recapped another conversion for $175M. This is where institutional capital is flowing. This is the biggest real estate transition in America.Episode Sponsor: Rise 48 EquityRise 48 helps you protect and grow your wealth by investing in large multifamily apartment buildings. Vertically integrated property management. Vertically integrated construction. They do all the work.rise48.comCREIC | Commercial Real Estate Investment ConferenceMiami | November 6-7, 2026500 seats. Free general admission. Spots are limited.creicmiami.com