Daniel Klaynberg secured $28 million in construction financing from Castellan Capital for a 12-story condominium tower at 129 East 28th Street in Manhattan's Kips Bay neighborhood. The two-year loan includes a one-year extension option.
The project marks a strategic pivot. Klaynberg originally planned the 43-unit building as rental apartments before converting it to condos. The shift reflects changing market conditions favoring ownership over rentals in Manhattan's mid-market residential development.
Castellan Capital's backing signals lender confidence in Kips Bay's condo trajectory. The neighborhood has emerged as a secondary market for Manhattan developers seeking alternatives to saturated areas like Hudson Yards and the Upper West Side. Lower land costs and shorter construction timelines attract both builders and institutional capital.
For buyers, the project delivers new supply in a price-conscious corridor. The Kips Bay location on East 28th Street sits near Bellevue Hospital and the East River waterfront, offering accessibility without premium pricing. A 43-unit building typically ranges from studios to three-bedroom layouts.
For the rental market, the conversion represents ongoing inventory loss. Manhattan multifamily developers face headwinds as construction costs climb and rent growth stalls. Converting rental projects to condos generates faster capital returns for sponsors, though it reduces long-term rental housing stock.
Landlords in Kips Bay face continued pressure as new ownership units compete for the neighborhood's limited buyer pool. Existing rental buildings must offer competitive amenities and pricing to retain tenants.
The two-year construction timeline with extension flexibility protects Castellan Capital from extended market exposure. Construction lending remains selective, so Klaynberg's approval reflects both his development track record and the project's feasibility within the current lending environment.
THE BOTTOM LINE: Castellan Capital's $28