NEW YORK CITY’S CHALLENGE OF CONVERTING OFFICE SPACE TO RESIDENTIAL

New York City Mayor Eric Adams recently unveiled the recommendations of a city-led task force to facilitate the conversion of underused office space into new housing for New Yorkers. The recommendations would apply to 136 million square feet of office space and could create housing for up to 40,000 New Yorkers in Midtown and other business districts.

help justify the cost of conversion.

Second, one city recommendation is to explore and pursue a tax incentive program to support production of affordable and mixed-income housing through office conversions.

Daniel Colombini Principal Goldman Copeland

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The announcement responds to COVID-19’s impact on office occupancy. A survey by the Partnership for New York City revealed that “As of late January 2023, 52% of Manhattan office workers are currently at their workplace on an average weekday ... Only 9% of employees are in the office five days a week.”

The proposed conversion of office space to residential is doable but faces challenges that are more economic than engineering. If the prospect of renting the office space is good enough, there will be no incentive for the conversion. The potential for conversion lies primarily in older, masonry-clad, mid-sized buildings. There the economics will have some additional dimensions.

First, property owners will need to consider the capital improvements associated with New York City's aggressive carbon-reduction goals as stated in Local Law 97. Under that law, most buildings over 25,000 square feet will be required to meet new energy efficiency and greenhouse gas emissions limits by 2024, with stricter limits coming into effect in 2030. Masonry-clad buildings often leak air. If the building will need significant capital improvements to avoid Local Law 97 fines, that could

If the economics make sense, then conversion can take place from an engineering perspective. There may be opportunities to reuse some of the existing infrastructure — beyond the core structure itself — depending on the current layout. For example, there should be enough existing electrical power, except for the demands of electric kitchens, given restrictions on the use of natural gas. The location of bathrooms would typically be different. So, too, is the need for kitchen exhausts.

One additional recommendation that the city should consider is rewarding property owners for reuse of existing buildings by giving them credit for the embodied carbon in the building. Embodied carbon is essentially the building’s carbon footprint. If the building were torn down, that embodied carbon would have to be transported and disposed of. By reusing it, the property owner is leaving much of the carbon footprint without disruption, and that should be rewarded in the city’s consideration of the building’s energy use.

The city is right to encourage conversion of underused office space to residential use. As the city considers proposed incentives further, it should incorporate energy-related incentives, as they affect both the economics and the engineering.