NYC could have 17K-plus more apartments due to conversions

New York City’s housing shortage may find an unlikely hero in its glut of underused office buildings.

A new report released Thursday by Comptroller Brad Lander estimates that the first major wave of office-to-residential conversions — largely catalyzed by pandemic-driven vacancies — could deliver as many as 17,400 apartments across 44 developments. 

These projects would transform roughly 15.2 million square feet of office space into housing, with the bulk of activity concentrated in Manhattan below 59th Street.

Among the most ambitious makeovers: the former JPMorgan Chase and New York Daily News headquarters at 25 Water St., now home to about 1,300 apartments; the old Pfizer campus in Midtown East, which is set to become 1,500 units; the former New York Stock Exchange at 40 Exchange Place is set to build 382 units; and 55 Broad Street, the onetime Goldman Sachs offices, converted into 571 homes.

Developers are showing no signs of slowing. 

In recent months, plans have surfaced to convert the 38-story 5 Times Square into 1,250 apartments and to rezone a Downtown Brooklyn site at 395 Flatbush Ave. Extension for a 72-story tower with more than 1,200 units.

The city’s push to reimagine obsolete office towers as housing got a boost in 2024 with the passage of the 467-m tax exemption. The new law offers developers hefty tax breaks in exchange for reserving at least 25% of units as affordable housing — and lifts longstanding restrictions on building density for residential conversions.

But Lander’s office argues that the program, while well-intentioned, may go too far.

Lander’s team estimates the generous exemptions could cost the city $5.1 billion in forgone tax revenue over the next 37 years, noting that developers in Lower Manhattan — where office property values have already slumped — might have pursued conversions without incentives.

The report concludes that lawmakers failed to “fine-tune” the program’s details, warning that some of the most generous incentives may go to areas that least require them.

Specifically, it warned that the blanket 90% exemption for projects south of 96th Street could prove overly lucrative for developers in areas already ripe for residential redevelopment.

Despite the fiscal concerns, the report emphasizes the upside of these conversions: namely, helping the city “absorb” a post-pandemic surplus of office space while seeding new mixed-use, mixed-income neighborhoods.