New York City Officials Propose Plans to Convert Office Buildings to Housing and Revitalize Midtown Manhattan
New York City officials have unveiled plans to address the city’s housing crisis and rejuvenate Midtown Manhattan’s struggling business district by converting office buildings into residential units and opening manufacturing areas to new residential development. Mayor Eric Adams outlined the proposals at a news conference held in a vacant office building.
Under the plans, manufacturing areas between 23rd Street and 40th Street, from Fifth Avenue to Eighth Avenue, would be rezoned to allow for more housing construction. Additionally, a separate plan focusing on office-to-residential conversions could potentially provide 20,000 new homes, according to the city’s estimates. However, both plans would require approval from the City Council, with voting expected to take place next year.
While these initiatives are seen as positive steps towards addressing the city’s housing crisis and revitalizing the economy, they still fall short of meeting the urgent need for housing in New York. The city is grappling with a shortage estimated to be in the hundreds of thousands. Nonetheless, developers and housing advocates have commended the city for taking action to tackle these challenges, acknowledging the changing landscape following the pandemic.
Mayor Eric Adams stated, “The world has changed. We have to be willing to change with it.”
These announcements come at a critical time when housing affordability is a pressing concern in New York. The median asking rent for new leases in Manhattan currently stands at approximately $4,400, having rebounded from its lowest point during the pandemic. Evictions are on the rise, and the population of individuals in homeless shelters has surged, with many being migrants seeking asylum after crossing the southern border.
Office conversions offer a promising solution, given the current shift towards hybrid work and the increasing demand for housing. However, regulatory restrictions and funding limitations have hindered significant progress in this area. The mayor’s plans aim to address these obstacles by allowing buildings constructed as recently as 1990 to be eligible for conversion, expanding the range of eligible structures. Furthermore, the plans propose allowing conversions anywhere in the city where zoning regulations permit residential use.
Notably, the plans lack provisions for funding the conversions, which often require substantial renovations. It remains uncertain to what extent building owners and developers will be motivated to proceed without incentives such as tax breaks or subsidies.
Susan Mello, of commercial real estate company Walker and Dunlop, emphasized the expense of conversions, particularly from office to residential units, and the need for lenders to finance these projects effectively.
Within the real estate industry, there is optimism about the mayor’s proposals. Paul Selver, from law firm Kramer Levin Naftalis & Frankel, believes the plans represent a significant step towards expanding the number of housing units.
However, the Midtown rezoning plan may face opposition from some city residents, despite receiving support from local Council members Erik Bottcher and Keith Powers, who stood alongside the mayor during the announcement. At present, no new housing is permitted in the target area.
The effectiveness of the city’s conversion initiatives may be limited without action from the state. Earlier this year, proposed bills that would have provided tax incentives for office conversions in exchange for affordable housing inclusion and removed a limit on residential floor space did not pass. The legislature also failed to pass bills that could have curbed exorbitant rent hikes in private apartments and provided tax breaks for developers, potentially making Midtown Manhattan more attractive for construction.
While these challenges pose obstacles to the realization of the city’s plans, New York City officials are determined to address the housing crisis and revitalize Midtown Manhattan, ultimately adapting to a post-pandemic world and ensuring the city’s long-term economic viability.