NYC May Convert Empty Office Buildings Into Apartments as More People Work from Home
One study estimates the city could create 14,000 apartments from unused offices.
Midtown and Downtown Manhattan collectively represent the largest commercial business district in the US. But as the work-from-home shift first brought about by the COVID-19 pandemic appears increasingly permanent and apartment rental prices in NYC spike to unprecedented levels, the City's glut of commercial real estate may get a makeover.
A new report from The City explores how NYC could reimagine many of its older office buildings for residential use. It estimates that around 10% of Midtown's less-desirable commercial buildings (referred to as "Class B" or "Class 6") could be converted, yielding approximately 14,000 new apartments in neighborhoods like Midtown East, Flatiron, and the Garment District. Overall, around 25% of all the office space in Manhattan is Class B or Class 6, a type less likely to rent in a world where companies downsize their offices.
New York Governor Kathy Hochul and NYC Mayor Eric Adams have tried to urge companies to bring their workers back to the office, but both seem resigned to the fact that a five-day, in-office workweek may never return. The City notes that Hochul's new state budget includes language that could make it easier to convert commercial real estate south of 60th street in Manhattan to residential use.
There are some challenges, particularly with offices built in the 1960s or later. Many companies desire spacious floors for their offices, creating buildings with large areas isolated from the light and ventilation required to create livable apartments. A 2017 rezoning of Midtown East also put strict limits on residential conversions and would have to be altered for plans to move forward.
But leaders need only look to the City's own history for a successful example. As CNBC previously reported, the decades after the 9/11 attacks brought sweeping changes to Lower Manhattan. The neighborhood more than doubled its population in part by rezoning unused office space for residential uses. One Wall Street is completing the largest office–residential conversion in the City's history, flipping 1.2 million square feet of commercial space into new apartments near the New York Stock Exchange. Others are hoping their model provides an example for the future.
Many obstacles remain, but as hybrid work arrangements grow in popularity and demand for NYC apartment rentals continues to soar, the City could be looking at a new life for its famous office towers.