New York City might find a solution to its housing shortage in an unexpected place: unused office buildings.
A recent report issued by Secretary Brad Lander suggests that the initial wave of converting offices into residential spaces—triggered largely by vacancies during the pandemic—could yield approximately 17,400 new apartments from 44 different projects.
These conversions, which have transformed around 15.2 million square feet of office space, are primarily taking place in Manhattan, specifically south of 59th Avenue.
Some ambitious projects include significant redevelopments at locations such as 25 Water St., and Pfizer’s former headquarters in Midtown, which is expected to offer around 1,500 units. Furthermore, the old New York Stock Exchange at 40 Exchange Place is aiming to provide 382 new homes, while the converted Goldman Sachs office at 55 Broad Street will contain 571 apartments.
Developers appear to be moving ahead without hesitation.
Recently, there have been plans to revamp five 38-story buildings into 1,250 apartments along with efforts to rezone over 1,200 other towers in Brooklyn, notably at 395 Flatbush Ave.
This city’s initiative to rethink outdated office spaces has been spurred by the new $467 million tax exemption, which encourages developers to set aside at least 25% of their units as affordable housing by relaxing longstanding building density regulations for such conversions.
Yet, Lander’s office cautions that while this program aims to encourage development, it may have overreached.
The estimates suggest that these tax exemptions could cost the city around $5.1 billion in lost revenue over the next 37 years.
The report indicates that lawmakers failed to “fine-tune” the program details, raising concerns that the most favorable incentives might end up in areas that already have sufficient potential for redevelopment.
For instance, Lander pointed out that the 90% tax exemption for projects below 96th Street might be excessively beneficial for developers in regions already poised for housing improvement.
Despite the financial worries, the report emphasizes the positive impacts of these conversions. They could facilitate the creation of mixed-income neighborhoods and help cities adapt to the surplus of office spaces left in the wake of the pandemic.
