A Buckling Skyscraper Shakes Confidence In Office Conversions

**Ryan Knutson** (0:05)
Something sudden and potentially very scary happened in New York City on Tuesday morning. People were worried that a skyscraper might fall down.
It happened at 235 East 42nd Street, in an extremely dense area of Manhattan.

**Peter Grant** (0:20)
This building is right near the Chrysler Building, right near Grand Central Terminal.

**Ryan Knutson** (0:26)
Our colleague Peter Grant covers commercial real estate.

**Peter Grant** (0:30)
People saw from the outside that the building seemed to buckle, and that's a very serious situation. It could lead to a collapse.

**SPEAKER_3** (0:40)
It all started with a report of bricks early Tuesday morning, falling from a 37-story high-rise under construction.

**SPEAKER_4** (0:47)
Video from construction workers 21 floors up, showing steel bending inside the building.

**SPEAKER_3** (0:52)
This prompted officials to evacuate nearby buildings.

**Ryan Knutson** (0:55)
I've been in construction 21 years, and I've never seen a beam bend in half.

**SPEAKER_4** (0:58)
A lot of disruption in this area, which is particularly busy here in Midtown Manhattan.

**Peter Grant** (1:05)
And so immediately, once people saw this and notified the authorities, the fire department, the building department, they realized how serious the situation could become, and they sprang into action.

**Ryan Knutson** (1:16)
Very quickly, the surrounding streets were blocked off. Everything from a school to a hotel to the Israeli consulate were evacuated.

**SPEAKER_5** (1:24)
It is a little unnerving knowing that there's a building that is at risk of falling down so close to us.

**Peter Grant** (1:31)
The greatest fear is a collapse, which could be a calamity. It could cause an enormous amount of lost lives and injury and property damage.

**Ryan Knutson** (1:40)
Peter's been looking at this building since long before it began buckling, because it represents a bigger real estate trend, one that's trying to solve America's housing crisis by converting empty skyscrapers into apartments.

**Peter Grant** (1:54)
This is a very high-profile project, and we've been very closely covering the conversion trend, and this is the biggest conversion in the country, so it certainly caught my attention.

**Ryan Knutson** (2:10)
Why should anybody who doesn't work or live on this block care about what's happening to this building?

**Peter Grant** (2:15)
Well, as we've been reporting, the conversion trend is a very important piece of what's happening in downtowns throughout the country, especially New York.
It's a big issue, and the project at the Pfizer building was in some ways pushing the envelope architecturally and in terms of size. And so, everybody who's in this business is noticing.

**Ryan Knutson** (2:45)
Welcome to The Journal, our show about money, business and power. I'm Ryan Knutson. It's Thursday, July 9th.
Coming up on the show, could a partially collapsed skyscraper set back a promising solution to America's housing crisis?

**SPEAKER_7** (3:12)
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**Ryan Knutson** (3:48)
Introduce us to this building. What's the backstory behind this skyscraper?

**Peter Grant** (3:52)
The building used to be the headquarters of Pfizer. It's actually not one building, it's two buildings. It's a huge structure. The two buildings combined are about 1.2 million square feet. It was not the most dramatic or noteworthy office building in the city, but it was a very large building that took up an enormous amount of space. And Pfizer, like a lot of other big corporations, decided they wanted new space and they moved out. And once Pfizer moved out, the building ran into the same situation that are facing older buildings throughout the country. Nobody wanted to move in. And so people needed to figure out what to do with it.

**Ryan Knutson** (4:35)
Was it pretty much empty?

**Peter Grant** (4:36)
It was, yeah. It was pretty much empty. The developer bought this building is probably the best known converter in the US.
The name of the company is Metro Loft. It was founded by a man named Nathan Berman way back in 1997 And this company has done more conversions than any other and have been pretty successful.

**Ryan Knutson** (5:00)
Why convert office buildings into residential properties? What's sort of like the opportunity here?

**Peter Grant** (5:06)
Well, first of all, the opportunity is that the building doesn't really have any other function.
It can't be used as an office building anymore. The demand isn't there. Meanwhile, there's a housing crisis. So when you look at the fact that this is an obsolete office building and there's a desperate need for housing, in a way it seems obvious.