New York City's plan for new housing means residents could live at the (former) office

New York City is hoping to convert vacant workplaces into apartments, with lemons-into-lemonade plans to tackle two crises simultaneously: too little housing and too much office space.

Although the city long has suffered from a housing shortage, the problem of excess office space is relatively recent, caused by a thinning of in-person attendance during the coronavirus pandemic and the rise of work-from-home guidelines.

Last month, Mayor Eric Adams announced he wants to make it easier to let office buildings be converted into housing in parts of Midtown Manhattan. And he wants to allow apartments and other housing to be built in certain areas below Times Square.

Long-standing zoning rules and infrastructure limitations make it difficult if not impossible for housing to be built and people to live in some of Manhattan, including those parts. Meanwhile, the city’s housing vacancy rate for rentals is about 1.7% — it’s long been low — but the office vacancy rate is about 17.4%, the highest since it started being tracked decades ago. 

“It’s unbelievable how much empty office space we have sitting idly by, with ready and willing participants to develop the housing, and we are in the way,” Adams said last month at a vacant office building. “Well, it’s time to get out of the way so we can turn these office cubicles into nice living quarters.”

Office buildings are fuller than anytime since the early days of the pandemic. But they’re far from full. Attendance is 60% on an average workday, versus well above 80% before the pandemic, before hybrid, work-from-home became the norm, according to the Partnership for New York City business group. Now, many workers typically go into the office three days a week. Fewer rentals of office space means property is worth less, meaning less tax revenue. 

City Council approval needed

If Adams' plans are approved by the City Council, 20,000 new apartments for 40,000 people in the next decade could be created out of vacant office space, and more housing could be built, from Fifth to Eighth avenues between 23rd and 40th streets in areas designated a half-century ago for manufacturing.

The idea to convert commercial space into housing is not solely a New York City one.

On Long Island, for example, the Town of Huntington is exploring whether to change the zoning code to permit homes in commercial areas. A formal plan could be presented next year, though a similar one several years ago failed.

But even if the conversion plans in the city and beyond work, they will barely make a dent in the housing crisis, according to Tracy Hadden Loh, a fellow at the Brookings Institution in Washington, D.C., who studies real estate.

Hundreds of thousands of units are needed in the city to meet demand. And unmet demand drives up the prices for rentals and purchases, Loh said.

The city’s housing crisis is worsening, exacerbated by rising prices, a shortage of new housing, a long-standing homeless problem and an influx of tens of thousands of foreign migrants who are stressing the shelter system.

Low housing stock

The city permitted 13 homes for every 1,000 residents in 2017, according to a report earlier this year from the Pew Charitable Trusts.

That's compared to Boston, which permitted 28, Washington, D.C., with 43, and Seattle with 67. 

"New York City’s housing stock has only increased 4% since 2010, not nearly enough to keep up with its 22% increase in jobs," the report said.

Among the 100 largest counties in the U.S., Nassau and Suffolk permitted less new housing on a per capita basis from 2013 to 2022 than all but one county, in Ohio, Bloomberg News reported last month.

Loh said: “Office-to-residential conversions aren’t gonna do anything to change prices on their own, because they address only a fraction of the total need. This is not to say that you shouldn’t do it.”

Much more needs to be done, she said, on top of the rezoning and conversion: allowing additional housing — such as an apartment on a single-family lot — without having to secure special government permission, increasing zoning density, expanding access to mass transit and relaxing the building code.

And the office conversions Adams wants come with many infrastructure demands — more schools, plumbing, police, trash collection and more.

Lower tax revenue from housing

There also are tax implications to putting housing where businesses currently are, because commercial real estate yields higher tax revenue than does residential, and housing plans tend to receive tax abatements.

“Converting offices to housing can result in revenue loss for the city, while also resulting in increased demand for services,” Loh said.

Maria Torres-Springer, an Adams deputy helping oversee the plans, said the city is aiming to break down bureaucratic barriers — which she acknowledged could be “daunting and complicated” — using what the city called an Accelerator Program.

“It often takes way too long,” she said, adding: “So the goal for the Accelerator Program is to get through that entire permitting process in about six months, because every day that we delay the conversion of a building into housing is another day that we don't make as much of a dent in our housing crisis as we need to.”

By Matthew Chayes

matthew.chayes@newsday.comchayesmatthew

Matthew Chayes, a Newsday reporter since 2007, covers New York City.