NYCEDC Closes First M-CORE Deal at 850 Third Avenue, Kicking Off Transformation of Aging Office Building Into Modern, Amenity-Rich Space

With M-CORE Incentives, HPS Investment Partners Will Invest $57 Million to Upgrade 850 Third Avenue, Leading to Increased Office Occupancy and Commercial Activity

850 Third Avenue is First of Three Approved M-CORE Projects to Reach Final Deal Closing, Program Remains Open for New Applications

NEW YORK, NY—New York City Economic Development Corporation (NYCEDC) and New York City Industrial Development Agency (NYCIDA) today announced the official closing of its first deal under the Manhattan Commercial Revitalization (M-CORE) program – a transaction with HPS Investment Partners (HPS) to transform 850 Third Avenue into a modern, sustainable, amenity-rich office building that will have a greater street presence, attract new tenants, and breathe life into the neighborhood.

M-CORE launched in May 2023 as a key recommendation from the ‘New’ New York panel’s Making New York Work for Everyone action plan—a set of 40 initiatives to reimagine New York City's commercial districts as vibrant 24/7 destinations—transforming business districts into vibrant, resilient, and healthy neighborhoods, and remain globally competitive in attracting and retaining businesses. M-CORE aims to address the challenge of vacancies in aging office buildings by providing financial incentives to undertake investments which will improve the quality of Manhattan’s office stock, create desirable workspaces that will attract businesses and top talent, make necessary upgrades and retrofits to ensure compliance with Local Law 97, and introduce dynamic ground floor retail.

Due to M-CORE, HPS will invest at least $57 million into the large-scale renovation of 850 Third Avenue, a 21-story building that has not undergone major renovation since 2008. When complete, the entrance and lobby will be expanded and will feature all-new finishes. Food and beverage offerings are envisioned for the currently vacant retail space on the ground floor—part of an “open restaurant” concept with enlarged storefront windows that will maximize natural light, attract pedestrians, and enliven the streetscape. After renovation is complete, there will be approximately 10,000 square feet of retail, 592,000 square feet of office space, and 13,500 square feet of dedicated amenity space.

“Today’s announcement is tremendous, and I want to applaud and thank the teams at EDC and in the private sector for the focus, diligence, and partnership to finalize this important transaction,” said Deputy Mayor for Housing, Economic Development, and Workforce Adolfo Carrión, Jr. “This project shows the efficacy of the M-CORE project to jumpstart underperforming office space and is one example of how the City of New York is developing new tools to support the continued competitiveness and dynamism of the city’s commercial office market.”

“We are thrilled to close our first M-CORE project, which will transform 850 Third Avenue,” said NYCEDC President & CEO Andrew Kimball. “As we see continued flight to Class A+ office space, M-CORE provides a shot in the arm to aging buildings, helping them meet the demands of the post-pandemic market. When complete, 850 Third Avenue will serve as a prime example of a state-of-the-art, sustainable, amenity-rich building that will attract new tenants and increase commercial activity in our central business districts.”

NYCEDC announced 850 Third Avenue as the first M-CORE awardee in January 2024. Additional highlights of the renovated 850 Third Avenue include:

• Ground floor renovations with an enlarged lobby entrance and separate private lobby for a future tenant.
• A business incubator, accelerator, or a significant high growth tenant in the green economy or a technology-focused industry such as cybersecurity or artificial intelligence.
• New tenant amenities, including conference space on the 3rd floor, which can host over 200 guests.
• All new elevators, HVAC systems, and electrical distribution infrastructure.
• All new windows.

Following the renovations, the building will have modern office layouts and offer significant tenant amenities, which are commonly sought after by tenants in today’s commercial leasing environment. HPS has entered into a strategic relationship with Waterman Interests, LLC to oversee all aspects of the redevelopment and building operations. Jones Lang LaSalle and Newmark Group, Inc. will lead the office and retail leasing efforts, respectively.

“The transformation of 850 Third Avenue through the M-CORE program is the kind of public-private collaboration that is needed to strengthen New York City's economy now and in the years ahead,” said Zachary Steinberg, Senior Vice President of Policy, REBNY.

“We are excited to commence construction and with our participation in the M-CORE program,” said Simon Wasserberger, Managing Director of Waterman Interests, who is overseeing the project. “We appreciate the leadership of Mayor Adams and NYCEDC in creating this unique program, and we look forward to utilizing M-CORE incentives as we begin this comprehensive renovation that will transform 850 Third Avenue into a modern, sustainable, amenity rich building.”

Since the launch of M-CORE, NYCIDA has approved three M-CORE projects. In addition to 850 Third Avenue, NYCEDC has announced 175 Water Street and the Hahn Kook Center (HKC) at 460 Park Avenue as M-CORE awardees. At 175 Water Street, M-CORE is supporting a $150 million demolition and rebuilding of all interior spaces, as well as energy efficiency and other upgrades to attract a community of fashion, arts, creative, and technology tenants. At 460 Park Avenue, M-CORE will support $200 million in planned improvements, including a new lobby to increase space and add natural light, replacement of the existing building façade with new cladding and windows, and full-electrification of the building.

Applications for M-CORE remain open through August 1, 2025, and interested owners can apply.

The city is utilizing a range of tools to address office vacancies and appeal to the post-pandemic workforce. The overall office vacancy rate stood at 14.5% in Q1 2025, totaling 105 million square feet across New York City. Office visitation to class A+ buildings continues to outperform that of non-trophy office visitation, hitting 85% in May, an increase in 2 percentage points over the past year, higher than overall office visitation, which was 72% in May, an increase of 1 percentage point over the past year.

In January 2025, the Adams Administration launched the “Race for Space” initiative, a comprehensive strategy to create jobs, attract talent, and address the city’s vacant office space across the five boroughs. Race for Space includes M-CORE as well as a series of new programs. Just a few weeks ago, the governor signed A8676/SB8063-A into law, extending REAP and LM-REAP and creating the RACE tax incentive. NYCEDC is also creating a new “International Landing Pad Network (ILPN),” which will support growth stage international companies in their expansion to New York City, attract new sources of innovation and investment, and grow jobs for New Yorkers. NYCEDC will announce the selected ILPN operators in the coming months.

About NYCEDC
New York City Economic Development Corporation is a mission-driven, nonprofit organization that works for a vibrant, inclusive, and globally competitive economy for all New Yorkers. We take a comprehensive approach, through four main strategies: strengthen confidence in NYC as a great place to do business; grow innovative sectors with a focus on equity; build neighborhoods as places to live, learn, work, and play; and deliver sustainable infrastructure for communities and the city's future economy. To learn more about what we do, visit us on Facebook, X, LinkedIn, and Instagram.

About NYCIDA
New York City Industrial Development Agency (NYCIDA) supports business growth, relocation, and expansion across the five boroughs by lowering the cost of capital investment. NYCIDA’s tax incentive programs bolster the local economy, create jobs for New Yorkers, and uphold the city’s position as a global business hub.