New York City is poised to address its housing shortage through a significant wave of office-to-residential conversions, with an initiative that could yield over 17,000 new apartments.
A report published by City Comptroller Brad Lander highlights the potential transformation of 15.2 million square feet of office space into residential units.
This shift follows the impact of the pandemic, which left many office buildings in Manhattan largely vacant due to the surge in remote work.
According to the report, 44 office conversion projects have either been completed, started, or proposed, marking an important step toward revitalizing the city’s housing stock.
Among the major projects included in this initiative are significant conversions such as the former JPMorgan Chase headquarters at 25 Water Street, which is now set to house 1,300 apartments, and the Pfizer headquarters in Midtown East, which will become 1,500 residential units.
Additionally, 55 Broad Street, once the Goldman Sachs offices, has also undergone conversion to create 571 new homes.
Recent announcements by developers have further accelerated this trend, including a project to rezone 395 Flatbush Avenue Extension in Downtown Brooklyn for a 72-story building that will feature over 1,200 apartments.
Another prominent conversion involves the 38-story building at 5 Times Square, which is set to yield 1,250 new homes.
This office-to-residential trend, gaining traction since the pandemic, aims to mitigate the oversupply of office space and transition towards more mixed-use neighborhoods.
The impetus for these conversions has also been strengthened by the introduction of the city’s 467-m tax exemption program, effective 2024.
This legislation provides tax breaks for developers who convert office buildings to housing, especially if at least 25 percent of the units are affordable.
Moreover, the legislation removed the previously existing floor-area-ratio (FAR) cap of 12, allowing these new residential buildings to expand to 15 to 18 times their lot size, while still mandating the inclusion of affordable housing units.
While Lander acknowledges the positive impact of extending tax benefits to projects beginning before June 2026, he raises concerns regarding the generous nature of the 90 percent tax exemptions for projects located below 96th Street.
These tax breaks, particularly in Lower Manhattan, could potentially undermine revenue generation, costing the city an estimated $5.1 billion in lost property tax revenue over the next 37 years.
The report cautions that the initial excitement over these conversions should be tempered with careful oversight of the tax exemptions.
It suggests that lawmakers may not have thoroughly calibrated the incentive structure to fully account for the varying property values in different parts of Manhattan.
Lander’s report emphasizes the importance of fine-tuning the program to prevent developers from excessively benefiting at the taxpayer’s expense.
Despite these concerns, the report also underscores the progress being made in adapting the city’s commercial real estate landscape to meet housing demands.
By transitioning to mixed-use and mixed-income neighborhoods, New York City aims to restore vibrancy to areas that had fallen into disuse as office spaces.
In related news, a recent rejection by the City Council may impact the proposed Bally’s Bronx casino project, as zoning changes needed for development were voted down.
The City Council, in a 29-9 vote with four abstentions, turned down the necessary land use alterations for the casino envisioned on a site at Ferry Point Park.
Meanwhile, the New York City Council has approved the One45 development plan in Harlem, which will ultimately yield 1,000 new residential units, of which 338 will be affordable.
This approval comes after previous proposals for the site failed due to disagreement over the percentage of affordable units required.
Mayor Eric Adams also faced judicial setbacks regarding the removal of a protected bike lane on Bedford Avenue, which was halted by a state judge, allowing the bicycle lane to remain intact for the time being.
In a bid to enhance the visitor experience at Pier 17, the venue’s owner has proposed adding a glass rooftop addition to host concerts during winter months.
If successful, this addition would enable a year-round concert series, thus facilitating greater use of the venue during a period that typically sees reduced foot traffic.
Lastly, New York City has unveiled a comprehensive 20-year vision for Hart Island, aiming to improve the conditions of the cemetery and enhance visitor amenities.
The Parks Department’s plan includes measures such as a welcome center, the adaptive reuse of the historic chapel for remembrance purposes, and initiatives aimed at restoring the island’s green infrastructure.
These developments underscore New York City’s ongoing efforts to not only tackle its housing crisis through innovative conversions but also enhance the quality of life across various neighborhoods.
image source from：6sqft
