NYC to get 12,000 new apartments from old office buildings

New York developers are transforming struggling office buildings into more than 12,000 new apartments in a bid to help offset the city’s worst housing crisis in decades.

Most of the units are either starting or completing construction next year, and more than 3000 of them will be earmarked as permanently affordable homes, according to a new estimate from the mayor’s office. A change in a tax-incentive last year also contributed to the growth.

Real estate developers have already turned iconic banking towers like Goldman Sachs’ former headquarters and JPMorgan’s old brick fortress into luxury apartments, helping remake the Financial District into a residential neighbourhood after the institutions moved uptown.

There’s been a more recent push into midtown Manhattan, with firms lined up to convert Pfizer Inc.’s former headquarters into more than 1500 rentals and others overhauling the Archdiocese of New York’s onetime home.

“We’re very encouraged by what we’re seeing in a short period of time,” City Planning Department Director Dan Garodnick said.

“We have a high vacancy rate in our commercial office buildings and a very, very dangerously low vacancy rate in our rental housing, and creating an opportunity for offices to convert into housing makes a lot of sense.”

Nearly 90 buildings have already joined a city program to help navigate government approvals for conversions, according to the city department. But after the recent frenzy, possible conversion candidates could face competition as Manhattan’s commercial real estate is seeing a stronger lease environment this year. Plus, transitioning an office building to residential apartments is tricky as many have dim interiors, vast floor plates and reams of regulations.

Manhattan’s office market is on pace for record levels of leasing in 2025, according to Michael Slattery, tri-state research director at CBRE.

“The opportunities for conversions are still there,” Mr Slattery said, because companies aren’t leasing office space in obsolete buildings.

New York City’s housing shortage and sky-high rents became a central theme in November’s mayoral election. Mayor-elect Zohran Mamdani ran on a promise to freeze rents and build tens of thousands of new units to bring down housing costs.