Mayor Eric Adams and his administration are facilitating the conversion of New York’s unused office buildings into much-needed housing. Forty-six buildings are currently enrolled in the city’s Office Conversion Accelerator program, with four already in the process of being transformed into more than 2,100 housing units.
The program, unveiled in August, seeks to “expedite” projects that involve transforming office workplaces, many of which were bustling before the coronavirus pandemic but now sit empty amid a global shift towards remote and hybrid work, into residential. The list of buildings includes 25 Water St., which previously leased to the National Enquirer, the Daily News, and JPMorgan Chase Bank and is the largest office-to-residential conversion in the country.
The Adams administration is also seeking to cut some of the red tape out of commercial buildings’ transition to residential by allowing non-residential buildings to become residential borough-wide and making buildings constructed after 1977 eligible.
The office to residential conversion trend will significantly shift the fabric of New York City for years to come. Converting office buildings into residential spaces will reduce the supply of commercial office space, potentially leading to increased competition for remaining office space and increased rents. Thus, owners of commercial buildings throughout NYC are expected to benefit, while tenants may be negatively impacted.
According to market sources, there is 95 million square feet of available space in Manhattan. Overall office vacancy is approximately 15.9%. It is plausible that continued conversion of office buildings into residential could lower the total amount of availability by a few percentage points, assuming existing demand and supply factors remain unchanged, leading to material market impact.
Tenants have a unique window of opportunity to take advantage of existing conditions now. So, our advice is to seize the market opportunity.
It is increasingly important to have a trusted and unconflicted advisor to help navigate the market and create substantial economic value. Armano Real Estate can help your company maximize concession packages and occupancy cost savings.
Please feel free to reach out to us regarding a no-fee lease review or hybrid space consultation. We can provide the planning and resources necessary to achieve your corporate real estate goal and vision.
New York City Office Conversion Links
https://www.axios.com/2024/01/16/office-conversions-nyc-apartments
https://www.nyc.gov/site/officeconversions/index.page
