PGIM provided a $57M loan, closed Friday September 11, to a joint venture of Mequity Companies and Flatiron Equities on 152 W. 36th St., an eight-story, 51,853-sf Class C office building (originally a warehouse) being converted to a Manhattan Mini Storage facility. The finished asset will hold roughly 1,500 units across 75,000 rentable sf, with eight stories added on top of the existing structure; TCO is expected within months and completion in early 2027. The sponsors bought the building for $23.8M in September 2024 from Falcon Properties. Colliers (Dylan Kane, Zach Redding, Jared King) arranged the loan and tied the underwriting to the Midtown South rezoning and the residential density it will bring. Commercial Observer reports proceeds are up and the coupon is down versus the prior construction loan; rate, term, construction-loan size and projected NOI are undisclosed.
The Signal. $57M of debt on a $23.8M acquisition is 2.4x the land-and-building basis, roughly $760 per rentable sf of storage, from an institutional life-company lender rather than the debt funds that dominate conversion financing — and before certificate of occupancy. Office-to-storage pencils in small, obsolete, low-ceiling buildings that could never convert to apartments. The value here was created by the entitlement, the vertical addition and the operator brand, not by the office market; the lender's appraisal sits comfortably above $57M on an asset that has not rented a unit. The thesis is not storage demand today but the apartments the Midtown South rezoning will bring next door.
Implications. Small obsolete office in rezoning corridors has a conversion path that does not require apartments, and institutional lenders will finance it pre-stabilization. Screen sub-60,000-sf Class C office for storage feasibility before writing it off as land.
Uncertainty: single-origin (Commercial Observer exclusive); rate, term and NOI undisclosed; projected storage rent per sf and prior construction-loan size not given.
Key Takeaways
- The Garment District recently demonstrated that a Class C office building is more valuable as a storage facility than as a workspace, with a value increase of 2.4 times, according to the lender’s calculations.
- A life-company lender secured construction debt for a storage conversion project before the COVID-19 pandemic (CO).
- Office-to-storage conversion is a common path for small, low-ceiling buildings that are unable to be converted into apartments.
- The underwriting process is influenced by the rezoning of the adjacent area, rather than the current demand for storage facilities.
Commercial Observer (exclusive) — PGIM Lends 57M on Manhattan Office-to-Storage Conversion — Sept 14, 2026 (11:55 AM ET) — https://commercialobserver.com/2026/09/pgim-office-to-storage-conversion-manhattan/
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