Real estate investment and development executive Don Peebles and private equity veteran Doug McNeely are launching a fund targeting the country’s oversupply of office space. 

Bisnow/Ciara Long

25 Water St. in Manhattan, known as SoMA, is the largest office-to-resi conversion in the country, with 1,320 apartments.

Peebles, who heads The Peebles Corp., and McNeely, who has held high-level roles at BlackRock and the Carlyle Group, seek to raise up to $1.5B for an office-to-residential conversion fund, Bloomberg first reported. It is the first initiative from the duo’s new firm, Donahue Douglas, which they launched late last year. 

“We’re building a transformational firm, world class, and we really want to impact the way people live, work and invest,” McNeely told Bisnow in an interview Friday. “So we do have great ambition. We’re an alternative asset management company. Our first strategy is this strategy.” 

The firm expects to raise the funds over the next six months.

McNeely told Bisnow the fund has received preliminary interest for two-thirds of its targeted raise. He said the partnership is in conversations with institutional, high net worth, sovereign wealth fund and offshore investors. 

The plan is to deploy the funds into 10 top-tier cities: D.C., New York, Boston, Los Angeles, Charlotte, Miami, Nashville, Dallas, Atlanta and San Francisco.  

“I would say there’s a generational opportunity to invest in these areas,” McNeely said.  

D.C. and New York are at the top of that list. D.C. is of particular interest due to its federal footprint, which the Trump administration has signaled it intends to drastically cut over the next few years. 

But that opportunity extends beyond the nation’s capital, McNeely said.

“The federal government is a property owner across the country, so that might be part of the strategy,” he said.

Peebles founded his namesake investment and development corporation in 1983. The firm has developed more than 10M SF and invested more than $8B across U.S. gateway cities including New York, Boston, Washington, D.C., Charlotte, Atlanta, Miami, San Francisco, and Durham, North Carolina, according to its website.

McNeely joined the Carlyle Group as a partner in 2022 after nearly nine years at BlackRock. He left Carlyle in 2024, he told Bisnow.

Overall office availability nationwide stood at 23.3% at the end of the first quarter, according to Avison Young. 

The nationwide office-to-residential conversion pipeline reached a record 70,700 units early this year, according to a RentCafe study. That is more than triple the 23,100 units that were on the boards in 2022.

“This isn’t a problem — or isn’t an opportunity — that’s going to be solved over the next year or so,” McNeely said. “This is a long-term business for us.”

Two months after launching a $1B venture targeting office-to-residential conversions, TF Cornerstone and Dune Real Estate Partners have already identified three buildings to turn into apartments. 

The fund, Alta Residential, is pushing to foreclose on a historic property in Philadelphia after buying a piece of the building’s distressed debt. It is also getting started on converting an office TF Cornerstone owns in D.C.’s central business district and is in final negotiations to take over a New York City property, TF Cornerstone principal Jeremy Shell told Bisnow in an interview.

The Fairfax, TF Cornerstone’s residential conversion of the former FBI headquarters in NYC.

Many of Alta’s projects will arise from distress in the office market and taking over problem loans, Shell said.

“A lot of these office buildings that are good conversion candidates, the values have eroded to the point where really the controlling position is in the debt,” he said. “So we’re looking at a lot of debt positions.”

The first target is the 1.4M SF Wanamaker office building in Center City, Philadelphia, where TF Cornerstone purchased the majority of the property’s CMBS loan. The foreclosure isn’t finalized — the building’s owner, Rubenstein Partners, placed it in bankruptcy proceedings last year — but Shell is optimistic.

“When we’re ultimately successful with that, we’re planning a conversion and repositioning of that historic building, which is very exciting,” he said.

TF Cornerstone, founded by brothers Fred and Thomas Elghanayan, owns and operates almost 12,000 residential units in Manhattan, Brooklyn and Long Island City as well as more than 4M SF of commercial, office and retail space between NYC; Washington, D.C.; Virginia and Pennsylvania.

The Alta fund, a partnership with New York-based Dune, is aiming to take on between 20 and 25 projects in total, Shell said, putting around half the equity toward deals in NYC and deploying the rest in target markets, including Boston, Atlanta, Charlotte, Raleigh, Los Angeles and San Francisco. 

The venture’s next projects could come from purchases out of foreclosure, buying debt and pursuing joint ventures with “people or banks who are in a situation where they need to ultimately reposition the office building that they’re currently sitting on,” Shell said.

The Elghanayans are no stranger to conversions. In 1997, Thomas Elghanayan — then president at Rockrose Development, a firm run by his two other brothers — converted 45 Wall St. from office to luxury residential as part of the Lower Manhattan Revitalization Plan. 

“Conversions are where Tom and Fred originally cut their teeth and had a lot of success over the years,” said Shell, who is Tom Elghanayan’s son-in-law. “We’re really excited to be going back into that space, now that the opportunity has presented itself.”

Including 45 Wall St., TF Cornerstone has completed 15 office-to-resi conversions spanning almost 5M SF, according to a company spokesperson. It also pulled off residential conversions at 95 Horatio St., which was previously a refrigeration facility in Manhattan’s Meatpacking District, and the Upper East Side building that used to house the FBI’s NYC headquarters. 

In the five boroughs, Alta is looking specifically at properties in the Financial District, Midtown, and parts of Brooklyn. 

The joint venture has a long history. Elghanayan worked with Dune CEO Daniel Neidich when the latter was at Whitehall Real Estate Funds, a hedge fund and private equity firm. Shell worked with Neidich after business school, Commercial Observer reported. 

Policy measures passed last year, including the 467-m tax break at the state level and the City of Yes rezoning that opens up more property conversions, have made conversions an appetizing pursuit for the first time in more than a decade, Shell said.

“Values of office buildings have come down, the incentives from the state are there in terms of tax abatements, and we think there’s a lot of opportunity that we’re going to be able to take advantage of in that space in New York,” Shell said. “I’m really excited about that because we haven’t seen that over the last 15 years, as much.”

Converting office buildings into housing has been pitched as a potential solution to two problems that cities across the U.S. are facing — what to do with older, underutilized office properties and how to create much-needed housing amid shortages across the country.

But ultimately, while conversions present an opportunity to take a chunk out of the housing crisis, Shell believes more policy action is needed.

“Conversions are not going to be the panacea or cure-all for New York City’s housing supply issues. Far from it,” he said. “It’s one tool that’s needed, and will generate thousands of new apartments and thousands of affordable apartments, but we need a lot more than that in order to address the housing shortage.”

KHP Capital Partners is planning to convert the historic Johnston Building into a 245-room hotel with a fine-dining restaurant and coffee shop on the first floor, a ballroom, conference room and rooftop bar. The building is just over 100 years old. Last year, KHP bought it from Spaulding & Slye Investments for $19.3 million.

Due to the building’s age, KHP hopes to land federal historic tax credits from the National Park Service. Buildings that qualify for federal historic preservation tax credits receive 20% of the rehabilitation’s qualified expenses.

Demolition has begun on the building’s interior, and construction will ramp up this spring. The project is expected to deliver in the summer of 2026.

It’s just the latest office-to-hotel conversion the firm has completed. The Charlotte Business Journal reports that KHP says it’s invested $1.25 billion in renovating existing hotel properties and rehabilitating other obsolete real estate into boutique hotels. Its portfolio includes projects in Philadelphia, Washington, D.C., Chicago and Portland, among others.

Childress Klein has been greenlighted to convert a Charlotte office complex into a mixed-use project. The company was granted a rezoning by the towns City Council on the Esplanade at SouthPark from office to a zoning classification that will allow up to 675 multifamily units and 277,000 square feet of office space. 

That number includes 77,000 square feet of existing office space, according to the site plan.

The Charlotte Business Journal reports Childress Klein acquired the 213,000-square-foot office property at 2101 Rexford Road, in June 2023 for $31 million. The development was built in 1982 and renovated in 2015. 

The development site includes Rexford Park II, a 77,000-square-foot office building at 2115 Rexford Road. That building will remain.

The new project is expected to include four total buildings, as well as outdoor amenity areas and green space.

One of Center City’s most iconic distressed office buildings could undergo a residential conversion following foreclosure proceedings expected to wrap up early next year.

TF Cornerstone plans to convert Center City’s historic Wanamaker Building into apartments following bankruptcy proceedings.

New York-based development company TF Cornerstone plans to transform the 1.4M SF structure at 1300 Market St. into apartments once the foreclosure process is complete, according to the Philadelphia Business Journal, which cited an unnamed source.

The vintage skyscraper’s current owner, Rubenstein Partners, is in the midst of bankruptcy proceedings in the Philadelphia Court of Common Pleas. TF Cornerstone acquired the majority of the building’s office debt in July and is pushing to advance the foreclosure case.

The two parties will have an opportunity to hash it out during a settlement conference scheduled for Jan. 6. If they don’t come to an agreement, a trial will begin on March 3.

The Wanamaker Building’s floor plate is roughly 100K SF, about five times larger than the ideal size for an office-to-residential conversion, the PBJ reported. One feasible but pricey solution would entail hollowing out the historically protected structure for an interior courtyard.

TF Cornerstone, which also bought the 435K SF Macy’s space on the first three floors of the building for $40M in 2019, has extensive experience with office conversions in New York City.

Its projects include 95 Horatio Street, a former refrigeration facility in the Meatpacking District that was converted to 318 residential units, and The Fairfax, a former FBI headquarters building that became 313 residences.

Last week, the company and partner Dune Real Estate announced plans for a new $1B office conversion venture called Alta Residential.

“Dune and TF Cornerstone have identified the conversion of office buildings to residential as a generational opportunity given the scale of the distress in office real estate together with the unmet demand for housing in the U.S.,” the companies said in a Tuesday press release.

In addition to TF Cornerstone’s hometown, Alta Residential will target the office markets in Washington, D.C., Boston, Atlanta, Dallas, San Francisco, Los Angeles, Charlotte and Raleigh, North Carolina.

Rubenstein paid $200M for a majority stake in the Wanamaker Building in 2017. It was 96% occupied at the time. That rate dropped to 36% when advertising firm Digitas vacated its space last year.

Rubenstein listed the building for sale in 2021 after several high-profile tenants, including the General Services Administration, the Department of Housing and Urban Development and the Children’s Hospital of Philadelphia, moved out in the wake of the pandemic.

The building went into receivership in September 2023. Details about TF Cornerstone’s plans to buy it first emerged in July.

Foxfield and AEW Capital Management, are moving ahead on their Sugarloaf Logistics Hub campus project in Gwinnett County, Georgia. Foxfield and AEW acquired the property in 2022 with the intent to convert a six-building, 740,000 square feet, corporate office campus into a master-planned campus with over 2.2 million square feet of industrial, warehouse and logistics uses in seven new buildings ranging from 120,000 square feet to over 600,000 square feet with flexible floor plates.

Souto Foods signed a lease on a 200,000-square-foot building within the campus for a significant cold storage component. The company plans to invest $28 million in the site and hire 70 new positions in the county.

Additionally, the duo sold a 13-acre multifamily development parcel to Westplan Investors. This land sale will pave the way for the development of approximately 330 multifamily dwelling units along Sugarloaf Parkway and Cruse Road. Construction is expected to commence in the second quarter of 2025. A JLL team headed up both the lease agreement and the land sale.

A four-team joint venture is seeking a low-interest federal loan to convert a downtown Atlanta office building into residential units. The Integral Group, The Atlantic Cos., T. Dallas Smith & Co. and Lalani Ventures are teaming up to transform the 1960s-era 2 Peachtree office building into 600 apartments, retail space, and office space. The loan, in the amount of $250 million, will take some of the risk of the project, one the city wants to meet its affordable housing needs. The project costs are expected to exceed $400 million.

The Atlanta Business Chronicle reports the project would be among the first office-to-residential conversions in the U.S. to leverage the loan program.

Originally a bank headquarters, the 44-story 2 Peachtree was later a state government building. Now, it is mostly vacant. At least 200 new affordable housing units would fill the tower.

California-based Orton Development is considering converting the nearly century-old Joseph Vance Building, an art deco property in downtown Seattle.

Location at the corner of Third Avenue and Union Street downtown, the project would turn unused Seattle offices into housing, reported the Seattle Times. City and state officials have recently passed legislation to encourage and support developers to undertake these types of conversion projects, offering tax breaks and regulatory relief.

Potential plans are still being finalized, but the Vance building project includes the initial vision to create 155 residential units and 10,000 square feet of retail space in the 14-story building. The 1929 Vance building offers potential as a conversion, given the property’s shape and layout.

Another one of Seattle’s well-known office buildings, Smith Tower, was recently sold to Seattle-based GT Capital which acquired the 110-year-old, 42-story building and Butler Garage in Pioneer Square.

Photo credit: Kidder Mathews

Construction crews began tearing down North DeKalb Mall as retail developer Edens prepares to transform the 73-acre property into a walkable, mixed-use district. The mall, shuttered in 2020, will be called Lulah Hills.

The redevelopment will add 1,700 apartments, 100 townhomes, and 320,000 square feet of retail and restaurant space…2.5 million square feet in all. The center will be at the intersection of North Druid Hills Road and Lawrenceville Highway near Decatur. An existing AMC theater will be retained during the build-out.

Edens bought North DeKalb Mall for $43 million in September 2021. In the summer of 2022, the DeKalb County Board of Commissioners rezoned the mall for Edens’ plans. The DeKalb Development Authority granted the project $70 million in tax incentives. 

What used to be called the Hickory Hollow Mall was the largest retail center in Tennessee. But like many malls across the country, it met its demise, and the Metro bought it and the 57 acres for $44 million.

Soon all that will be left of the shuttered mall are four anchor buildings, three of which are occupied by Nashville State Community College, the Southeast Community Center, and KIPP Nashville. With the remainder of the property, Metro says it wants to transform the mall site and study area into a mixed-use, walkable center and regional destination.

The latest proposal for the recently renamed Global Mall at the Crossings calls for a multi-phase development that could incorporate the following elements across three “subdistricts” known as Arts Village, Innovation Village, and Opportunity Village:

• Transit center
• Mixed-use buildings with housing and ground-floor retail
• Parking garage
• Hotel
• Office and co-working spaces
• Space for performing arts, museums, or other civic use
• Retail, restaurants, and art studios
• A trail loop around the perimeter