BHI has committed $169.5 million in construction financing for a major office-to-residential conversion in Midtown East Manhattan. Quantum Pacific Realty and Metro Loft, operating as a joint venture, will transform 767 Third Avenue from a 282,000-square-foot office building into 337 apartment units across 68,000 square feet of residential space.
The project targets the growing demand for housing in Manhattan's core while tackling the persistent office vacancy crisis that has plagued the neighborhood. Midtown East has struggled with elevated office vacancy rates as companies downsize footprints and embrace flexible work arrangements. Converting underperforming office stock into residential units addresses both supply shortages and asset underutilization in the district.
BHI's financing structure supports the substantial costs involved in adaptive reuse conversions, which typically require extensive mechanical, electrical, and plumbing system replacements, structural modifications, and compliance with residential building codes. Construction financing at this scale reflects lender confidence in the conversion thesis for Manhattan office buildings in gateway locations with residential appeal.
For buyers, this development adds rental or ownership options in Midtown East at a time when new housing supply remains constrained. For office landlords holding similar aging Class B or C properties in the area, conversions demonstrate a viable exit strategy amid prolonged leasing headwinds. Tenants currently occupying office space in nearby buildings face continued pressure as landlords evaluate their own conversion prospects or repositioning options.
The conversion market in New York City has accelerated since 2021, though project economics remain tight. Sponsors must balance construction costs against rental income potential and navigate financing availability. BHI's participation signals that lenders see sufficient value in strategically located office-to-resi deals to fund large-scale projects.
The 767 Third Avenue project will compete for residents with new construction and