The project comes at a time when listing inventory has fallen sharply and price indicators have edged higher for loft space in Manhattan. According to Q2 2012 sales data from Prudential Douglas Elliman, median sales prices increased 4.4% to $1.79 million from the prior year quarter for lofts in the borough, and prices per square foot inched up 1.1% to $1,182 over the same period.

In addition to pricing, Ziel Feldman, founder and managing principal of HFZ, says the development is being driven by a “strong demand” in the market for larger apartments in Lower Manhattan. “We focused on this highly desirable area of the city and recognized the potential of this historic property,” he says, in a statement. “Today, we’re forging ahead with plans to convert it into a luxury, residential condominium that fits the character and style of the neighborhood. This type of addition to our portfolio -- a historic property in a sought after neighborhood -- has become a signature of HFZ."

Howard M. Lorber, president and CEO at New Valley says the company chose to partner with HFZ on the project because of the "prime location" of the building. The property is situated on an “L” shaped plot with 81 feet of frontage on Beach Street, 52 feet of frontage on Varick Street and 101 feet of frontage on St. John’s Lane, close to the newly-renovated Hudson River Park and high-end restaurants like Bouley, Corton, Nobu, Megu and Mr. Chow. New Valley also owns a controlling interest in Douglas Elliman Realty.

An HFZ spokeswoman declined to comment to GlobeSt.com about acquisition information, project costs and asking prices for the condominium units.