Surge in Office-to-Apartment Conversions in NYC
This year, New York City is experiencing a notable uptick in the conversion of offices into residential spaces. There are plans for 16,358 new apartment units, nearly double the 8,310 units from last year, based on recent research.
One of the prominent properties in this shift is the Candler Building at 222 W. 42nd St. Yellowstone Real Estate Investments has secured $205 million in financing for renovations. The plan is to create around 176 market-rate units in what previously were mainly vacant office spaces, previously intended for a hotel.
Yellowstone took control of the building in 2022 after it narrowly escaped foreclosure under its former ownership. The move to redevelop comes following findings that New York is leading the trend of transforming office spaces into apartments, far ahead of other U.S. cities.
More than 26,000 apartment units are currently lined up for repurposing, with a majority located in Manhattan, derived primarily from former offices, as highlighted in a study by RentCafe, which is linked to WeWork’s parent company.
In fact, New York has converted twice as many office and hotel spaces into residential units compared to the next closest city, Washington, D.C., and even quadruple that of Chicago. The figures indicate a marked increase from a year prior.
This conversion wave offers cities several advantages. Over the last twenty years, it has led to the creation of many new homes, easing the longstanding housing shortage. Simultaneously, around 30 million square feet of office space has been eliminated, notably from older, rundown buildings in the Financial District.
This trend isn’t just a spontaneous occurrence; city hall, under the leadership of former Mayors Bill de Blasio and Eric Adams, has relaxed regulations that previously restricted these conversions and has made the approval process more efficient.
“New York City has the most favorable regulations in the country for converting commercial spaces to residential,” stated REBNY President James Whelan.
“Outdated offices are being replaced with essential housing that supports new retail and vibrant neighborhoods,” he added. Mitchell L. Moss, a New York University urban policy professor, also noted, “By reimagining these old offices, we’re generating housing without displacing residents, similar to transforming old factory lofts in past decades.”
Moss recognized some city officials for their efforts in easing regulations and allowing for increased density in developments. He mentioned that up to 12,000 housing units are currently planned or under construction in Lower Manhattan alone.
“In the next eight years, Lower Manhattan will see more housing built than at the Sunnyside Yards project. This new housing will also generate numerous jobs, often with better wages than those in manufacturing or early childhood education,” he elaborated.
One well-known downtown project is 111 Wall Street, a tower from the 1960s set to be revamped and modernized. However, it struggled to find tenants during the pandemic. The developers, Intervest Capital Partners and Metroloft, are working to add 1,500 new homes behind a sleek new facade.
In Midtown, 680 rental units are being constructed at 750 Third Avenue by SL Green. This project, which involves a 35-story vintage tower, has even altered its structure to include a winter garden on the 13th floor, with an anticipated completion date of 2029.
Meanwhile, TF Cornerstone is starting renovations at 135 East 57th St., where 350 more apartments will be built. Additional significant renovations have either been completed or are on the scoreboard for buildings like 5 Times Square, 25 Water Street, and the old Pfizer headquarters at 3rd Avenue and 42nd Street.
