Chelsea Office Conversion Project 'The Frame' Heading To Foreclosure Auction
A Manhattan industrial-to-office conversion project that is almost complete will be sold at foreclosure auction next month, with the lender aiming to claim the property and finish construction.
SME Capital provided ERBO Properties nearly $4.8M for its 81K SF boutique office project at 541 West 21st St., which is now 99% complete, Crain’s New York Business reports. The project will be sold at auction in July, and SME is planning to bid on it in hopes it can finish up the development, pay the $56M senior loan provided by G4 and lease up the property, according to the publication.
Eran Silverberg, a managing principal at SME, told Crain’s the idea would be to either find a single tenant or rent it out in separate pieces, ahead of possibly selling the asset when the market is better.
The property, known as the Frame, will have 5K SF of office on the ground floor and 8K SF on the second floor, New York YIMBY reported. The third through ninth floors will span 9K SF and amenities include a rooftop lounge.
Wix and Shopify were both considering taking space in the building but were put off by construction delays, per The Real Deal. The project broke ground in 2019 and was expected to deliver in January but ran out of funds. SME attempted to foreclose on the property in February, but ERBO put the building into bankruptcy to stop those proceedings. A federal judge is now allowing the foreclosure to move forward with an auction on July 10.
Office leasing has been tough in Manhattan this year, as companies react to a tougher environment and uncertainty about the future of office use. Some $1.7M was leased in May in Manhattan, per Colliers. That figure marks a 17% jump on the month before, but a 28.5% drop on last year.
