Office-to-residential conversions — one of New York City’s leading housing strategies — have been shaken by recent safety concerns.
This summer, a “stop work” order was issued for the former Pfizer building in Midtown due to structural issues with steel columns, prompting fears of a collapse and temporary evacuation of the surrounding area. A lower Manhattan conversion at 222 Broadway was briefly halted over reports of a cracked horizontal concrete beam, and a Midtown East conversion — 750 Third Avenue — was partially stopped, also because of problems with steel columns.
Mayor Zohran Mamdani plans to build 200,000 new homes during his first term. The issues with the office conversions raise questions about one of NYC’s main means of boosting housing supply. Business Insider spoke with policy analysts and developers about the safety concerns, construction challenges, and what it all means for the future.
Office conversions require costly retrofitting
When constructing dense housing, cities have a few options: They can build from scratch, build above existing businesses, or convert underused hotels and offices into apartments.
Offices, in particular, are ripe for housing because many were fully or partially vacated at the height of the pandemic. The NYC office vacancy rate was 15.2% in the second quarter of 2024, the state comptroller reported, up from 7.8% in the second quarter of 2016.
(function(){function e(){window.addEventListener(`message`,function(e){if(e.data[`datawrapper-height`]!==void 0){var t=document.querySelectorAll(`iframe`);for(var n in e.data[`datawrapper-height`])for(var r=0,i;i=t[r];r++)if(i.contentWindow===e.source){var a=e.data[`datawrapper-height`][n]+`px`;i.style.height=a}}})}e()})();
Former workspaces provide a lot of space, but developers and policy analysts said construction can be challenging — part of the reason conversions have faced structural safety issues.
Offices typically have a different foundation setup than residential buildings. Emma Waters, a senior housing policy analyst at the Bipartisan Policy Center, said this makes it more difficult to adjust floor plans, add floors, and split into units with their own kitchens and bathrooms.
Plumbing is a concern. In a hotel conversion, for example, the space is already equipped with the piping and water system needed to sustain hundreds of toilets and showers. Offices might only have one or two bathroom setups per floor, which construction crews need to supplement during the conversion process.
Most offices also have large sets of windows along the exterior, without a central courtyard or interior windows. Ensuring every apartment has adequate sunlight — something that is both nice for residents and required by many building codes — can be a logistical challenge. And residential windows must open for fire safety, a feature not built into most office windows. Updating all of that infrastructure takes significant time and resources.
“In hotels, every room has natural light,” NYC property developer David Schwartz previously told Business Insider. “That’s the biggest problem. That’s why the office conversions are much more difficult — because once you start cutting out concrete in the middle of a building, you’ve put yourself into a really complicated project.”
Waters added that conversions are easier in smaller buildings. “It is very, very project dependent on whether it’s going to be faster and more cost-effective than building a new building, or if it’s going to be super complex and require a lot of expensive retrofits,” she said. She added that co-living models — like having individual bedroom spaces but central, shared kitchens and bathrooms among neighbors — could be a happy medium.
Conversions remain important for housing supply
Despite elevated safety concerns, office conversions remain one of New York’s top housing priorities. Manhattan converted 5 million square feet of office space in 2024, up from 2.7 million the year prior. Aside from a dip during the pandemic, conversions like this have been trending upward.
(function(){function e(){window.addEventListener(`message`,function(e){if(e.data[`datawrapper-height`]!==void 0){var t=document.querySelectorAll(`iframe`);for(var n in e.data[`datawrapper-height`])for(var r=0,i;i=t[r];r++)if(i.contentWindow===e.source){var a=e.data[`datawrapper-height`][n]+`px`;i.style.height=a}}})}e()})();
There are also existing tax and subsidy programs that incentivize office-to-housing projects. The state rolled back a 60-year-old restrictive zoning law this year, making it easier to build denser apartment buildings. The Mamdani administration has taken specific actions to streamline permitting and construction, and the newest federal housing bill includes grants to help cities like NYC offset the cost of converting commercial space into homes.
All owners and developers for the Manhattan office projects flagged for safety issues have made public statements that they are reviewing safety documentation and protocols for the buildings and making repairs. The developers did not respond with specific comments to Business Insider. At a July press conference about the compromised Midtown building, Mamdani said, “Safety is paramount for us in every decision we are making right now.”
Meanwhile, market-rate rents in New York City continue to climb, reaching $5,000 a month in Manhattan this summer as supply dwindles. The majority of residents are rent-burdened, meaning they spend at least 30% of their total income on housing.
Structural issues may slow down a few specific projects, but Waters said office conversions are here to stay. If Mamdani plans to build 200,000 new homes — and make rent more affordable in the long run — every new building with a few hundred units counts toward that goal.
“It’s definitely an all of the above, as needed situation,” Waters said. “We are really, really deep into this supply deficit. There’s not going to be a silver bullet.”
Read the original article on Business Insider
The post NYC’s best shot at affordable housing has hit some roadblocks appeared first on Business Insider.
