When does a 40 foot lease depth with one wet stack stop being worth studying?

One thing on the light court, from the debt side of the conversation: cutting it reduces rentable area, so the completed appraisal comes down while your hard cost goes up. A lender I talked to wanted the light-court loss carried in the day-one pro forma rather than showing up later as a design change. Coring post-tension slabs also tends to get priced with a risk premium by anyone willing to sign a GMP on it.

The ratio I've seen used is total conversion cost per gross sf against ground-up per gross sf for the same product type, and the screen is somewhere around 65 to 75 percent. Above that you're paying nearly new-build money for a compromised plate and a fixed floor-to-floor. Remember demolition of a 300,000 sf tower isn't free either, call it $25 to $40 per sf plus abatement, so the new-build comparison has that loaded into the land basis. Your 12'8" slab to slab is the number I'd worry about more than the 40 feet, because once you hang ductwork and a sprinkler main under a beam you're fighting for ceiling height in the deep part of the unit.

Genuine question because I don't know the rules yet. Why can't the deep interior just be closets, laundry, and storage so nobody needs a window back there? Is that a code thing or a rentability thing?

@ember it's both, habitable rooms generally need light and air, and jurisdictions define that differently. On the coring, the scanning cost is what gets me. GPR mapping is priced per penetration and if you're putting in a few hundred new penetrations across 14 floors it stops being a rounding error.

Before you spend anything on a test fit, pull the title work and any reciprocal easement agreement with the neighboring garage or plaza. Older downtown towers often carry use restrictions that were written for commercial occupancy, and a REA that assumes office hours for shared loading can be a genuine problem for residential. Also check whether the curtain wall system permits operable units at all, because replacing it changes the budget by an order of magnitude.

Forty feet deep with one window sounds like a bowling lane. Who signs that lease?

@marlow people do rent them, they just rent at a discount, and the discount is the thing that kills the underwriting rather than the vacancy. @girder the screen I use before anything else is linear feet of usable window line divided by net rentable area. Around 1 foot per 30 to 35 sf you can lay out a normal unit mix. Your plate at 40 feet net of a 25,000 sf core is going to come out worse than that unless the building is long and skinny. Run that ratio on the as-built and then again after the light court, and compare the delta in unit count to the cost of the cut.

Ask the sponsor for the actual test fit sheets, floor by floor, and count units yourself. I've read decks where the unit count was gross of the two floors that turn out to be mechanical and amenity, and the difference was 18 units. Also ask who paid for the test fit, because a sponsor using the seller's architect gets the seller's answer.

The two conversion funds whose screens I've been shown both reject anything over roughly 35 feet core-to-glass before they'll even spend money on a test fit. Doesn't mean 40 is impossible, it means you're outside the box that institutional capital pre-screens for, so you'll be funding the feasibility work yourself and pitching against a bias.

Is demolition even on the table? A 1984 tower probably isn't landmarked, but plenty of cities have added review layers for demolition downtown, and that varies city by city. Worth knowing before you use new construction as your comparison, because if you can't tear it down the alternative isn't ground-up, it's holding an empty building.

The document that decides this for you is the original structural package. On post-tensioned slabs you need tendon layout drawings to core with any confidence, and in seller files from the mid-eighties they're frequently missing or incomplete. Absent them, every penetration becomes destructive investigation, and the contractor prices that uncertainty into the number you're trying to compare against new build. I'd make production of the tendon shop drawings a diligence condition and see how the seller reacts. If they can't produce them, your 65 percent ratio conversation is happening on top of a cost you can't bound yet.