Office-to-Residential Conversion Projects Gain Momentum

The persistence of hybrid work has led to mounting vacancies in Manhattan’s core office districts. These vacancies, coupled with the city’s ongoing housing shortage, have prompted city and state leaders as well as private developers to aggressively pursue office -to-residential conversion projects in order to increase supply and reinvigorate these districts as 24/7 live-work-play neighborhoods. Adaptive reuse of aging and underutilized office stock has a long history in Lower Manhattan, beginning with the 421-g tax incentive program developed by the state in the 1990s to address high vacancies through conversion, and continuing into the postSeptember 11 period, when conversions were touted as a way to help Lower Manhattan rebuild and recover from the attacks.

As Manhattan’s oldest office district, Lower Manhattan contains many older office buildings that have contributed to rising vacancy rates. Gov. Hochul and Mayor Adams are proposing a package of regulatory reforms, including lifting the 12 FAR cap on residential density, that would ease the path for conversions at many of Lower Manhattan’s larger office buildings.

Developers are already taking advantage of a soft office market and the continued attractiveness of Lower Manhattan as a residential neighborhood of choice. Several conversion projects have been announced since the beginning of the pandemic, including:

• 25 Water Street (4 New York Plaza): Developers GFP, Metro Loft Management and Rockwood Capital purchased The 1.1 million sq. ft. office building, formerly known as 4 New York Plaza, for $250.8 million and announced plans to convert the property to a 1,300-unit rental building. This will be the largest office-to-residential conversion to date nationwide.

• 160 Water Street: Vanbarton Group is currently working to convert the 24 story, 482,000 sq. ft. office building into a 586-unit market rate rental building. The conversion plan calls for the addition of five new floors and the building will be reclad with glass curtain walls. Construction is scheduled for completion by late 2025.

• 55 Broad Street: Silverstein Properties and Metro Loft Management announced plans to convert the 425,000 sq. ft., 30-story property into a residential building containing 571 market-rate apartments. The conversion is expected to take three to four years to complete.

• 85 Broad Street: a partnership between Metro Loft and Fortress Investment Group revealed plans to convert the 1.1 million sq. ft. former Goldman Sachs headquarters to rental apartments. A final unit count and construction timeline have not yet been announced.

• 17 Battery Place: Moinian Group converted 20 stories of the 940,000 sq. ft. office building to 490 rental apartments in 2001. Moinian recently announced plans to convert three more floors of the remaining office component into an additional 170 units over the next three years.

• 90 John Street: Moinian Group converted a portion of the 344,914 sq. ft. office building to 221 rental apartments in 2000. Moinian recently announced plans to convert the remaining office component to 115 new units over the next two years.