The Fashion Institute buys new dorm building for $48m

Real Estate Weekly, August 25, 2004

The Fashion Institute of Technology, a college of the State University of New York, has purchased a 15-story former manufacturing and office building at 406 W. 31st St., to be converted into 493 apartments for students. The purchase price was $48 million; approximately $64 million will be spent on renovation, making a total project cost of $112 million.

Designed to provide affordable housing to 1,100 students, the residence will nearly double FIT's residence space and help ease a serious shortage of on-campus housing. The residence hall is scheduled to open in August 2006.

This re-development will be one of the first new construction projects in the Hudson Yards area, the site of a major redevelopment program proposed by the city.

Just five blocks away from FIT's campus in Chelsea, the new building will be owned by the Fashion Institute of Technology Student Housing Corporation, a not-for-profit auxiliary corporation established to own and manage residence halls for FIT. The nearly 320,000 s/f, 100-year-old building will be gutted and transformed into two-, three- and four-bed suites, with additional accommodations for resident counselors. Amenities will include cyber and study lounges, a laundry facility, a fitness room and administrative offices. There will be 24-hour security coverage and a state-of-the-art fire safety system.

Wank Adams Slavin Associates LLP will serve as the architect for the space.

FIT president, Dr. Joyce F. Brown, said, "With 11,000 students, 6,500 of whom are full-time, and only 1,200 beds, FIT has had to place severe restrictions on who can live in our residence halls and how long they may be housed on campus. 1 am delighted that we are taking this first step toward providing much-needed, additional high-quality, affordable housing for our students."

Because of the shortage of on-campus housing, only students entering an associate degree program who come from beyond a 35-mile radius of campus may apply for student housing. Housing is then available for only the first year.

Financing for the project was arranged on behalf of FITSHC by the Dormitory Authority of the State of New York.

"We couldn't have accomplished this without the help of DASNY executive director Maryanne Gridley and her staff," said Harvey Spector, FIT's vice president for finance and operations.

Lehman Brothers provided investment banking services through the sale of $144.5 million in insured revenue bonds. Morrison & Foerster and Wachtel & Masyr were the attorneys for the college. George Kaufman, an FIT trustee and New York-based real estate developer, acted as an unpaid advisor to the board and negotiating team.

"Mr. Kaufman's experience was critical in successfully completing the real estate transaction," President Brown said. "We also want to thank Thomas F. Egan, chairman of the State University of New York board of trustees, for his assistance in making this possible."

Zoned for manufacturing as an M1-5 site, the building required a use variance. Community Board 4 unanimously endorsed the variance request and the Board of Standards and Appeals approved it.