PGIM prices an office-to-storage conversion at completion

PGIM has supplied $57 million to refinance the office-to-storage conversion at 152 West 36th Street, a Midtown property that a joint venture of Mequity Companies and Flatiron Equities Real Estate bought in September 2024 for $23.8 million as a 51,853-square-foot Class C office building, Commercial Observer first reported. The loan closed Friday afternoon, retiring prior construction debt and funding the last stages of a conversion that stacks eight new floors onto an original warehouse structure and will deliver roughly 1,500 self-storage units under the Manhattan Mini Storage flag across 75,000 rentable square feet, with completion slated for early 2027.

At the purchase price, the shell works out to about $460 a square foot and the new debt to roughly $38,000 per storage unit, terms Colliers negotiated with a team led by Dylan Kane, Zach Redding and Jared King. Kane, a Colliers managing director, said the project expects a temporary certificate of occupancy within a few months and that the progress "allowed us to increase loan proceeds, lower borrowing costs meaningfully and also provide some runway through the lease-up."

Kane's demand case rests less on the building than on the Midtown South rezoning and the residential units it will eventually produce, a forward bet on household formation layered on top of the conversion itself. That layering is why the direction of the terms matters more than the headline number: proceeds up, borrowing cost down, as the asset crossed from construction into completion. Conversion debt now prices at the certificate of occupancy, and lenders are paying up for the interval between a finished shell and a rent roll that has yet to sign a single lease.

This publication has argued that the office clearing trade broadens as commodity stock is converted and each print lowers the uncertainty premium for the next trade. A $57 million takeout extends that position into the debt stack, and it fits PGIM's pattern of lending against collateral-specific income rather than asset headlines — the manufactured-housing book it has assembled, and the speculative Charleston warehouses it built with Greystar, were both underwritten on the leasing spread. Self-storage is the same instinct applied to 1,500 leases signed one padlock at a time, with a brand on the door doing the work that a tenant roster does elsewhere.

The financing does not yet demonstrate the rezoning thesis underneath it: the eight added floors have to arrive on schedule, and stabilization is a post-2027 question, so the sponsor is carrying the demand bet for at least two more years on terms it improved before the building was finished. The template for converted commodity office now looks like an operator's name plus a temporary certificate of occupancy, which turns a Class C shell into lendable collateral; at a basis near $460 a foot on the acquisition, that combination is worth more to a lender than four vacant floors of Midtown office.