Office-to-Residential Conversions: The Future of New York Real Estate

Industry News
Sep 5
3 min read

Updated: Sep 11

As a long-time player in the New York real estate market, I've seen a lot of trends come and go, but the current wave of office-to-residential conversions is a fundamental shift in how we use space in this city. This isn't just a temporary reaction to remote work; it's a structural change, and the data from Comptroller Brad Lander's office proves it.

The Two-Tiered Office Market Reality

What makes this moment unique is the clear divergence in the office market. From the fourth quarter of 2019 to the first quarter of 2025, occupied space in "5-Star" buildings grew by about 11.5 million square feet, while it declined by 43 million square feet in the rest of the market (Class A ex-5 Star and Class B & C). This is a clear indicator of the widening gap between high-end office spaces and the older, more economically obsolete buildings that are ripe for conversion.

Market Transformation at Unprecedented Scale

The Comptroller's report notes that the post-pandemic conversion pipeline includes 44 buildings totaling 15.2 million gross square feet, with the potential to create approximately 17,400 apartments. This is a massive undertaking that could absorb over a third of the occupancy lost in the lower tiers of the Manhattan office market since the fourth quarter of 2019. The conversion activity is already on track to exceed the totals seen during the 421-g program in the Financial District in the 1990s and 2000s, and to triple the production of residential units from commercial space seen from 2012 to 2020.

The 467-m Property Tax Exemption Program

The city and state have responded with crucial policy changes that make these conversions not just possible, but financially attractive. This provides tax benefits for up to three years during construction and for between 20 and 35 years afterward, depending on the project's start date. To qualify, at least 25% of the new apartments must be income-restricted and rent-stabilized in perpetuity. This zoning amendment now allows conversions for buildings built before 1991, dramatically expanding the pool of eligible properties. To secure the full 35-year 467-m abatement, projects must be approved by June 2026. With planning and filings often taking a year or more, the clock is already ticking.

Learn More about 467-M Abatement: https://www.skylineprp.com/post/the-clock-is-ticking-secure-nyc-s-35-year-tax-abatement-before-it-s-too-late

NYC Top 10 Office to Residential Conversions

Conversions aren't new to New York. The difference today is the sheer scale. We're not just looking at a handful of trophy assets. Some of our most celebrated buildings have undergone this transformation:

The Woolworth Building – Once an office landmark, now 33 luxury residences.
The Plaza Hotel – A historic Midtown hotel transformed into condominiums.
One Wall Street – Converted into a mixed-use development with residences and retail.
The Park Avenue Armory – From military facility to cultural hub and luxury living.
70 Pine Street – Former AIG headquarters, now 600 apartments plus amenities.
The Apthorp – Once converted to offices, now restored as a premier residential property.
10 Madison Square West – Former International Toy Center, now high-end condos.
The Beekman Residences – A office building turned into a hotel and residences.
The Greenwich Lane – Built on the site of St. Vincent’s, now a luxury residential enclave.
One Vandam – A SoHo office building converted into stylish modern condominiums.

Summary Data Post-2020 Conversions

Total Buildings: 44
Total Gross Square Feet: 15.2 million
Total Apartments: 17,432
Rentals: 32 buildings, 13.5M gsf, 16,510 units
Condominiums: 12 buildings, 1.8M gsf, 922 units
Eligible for 467-m: 27 buildings, 12.6M gsf, 15,414 units

The Path Forward

For building owners, conversions may be the smartest way to unlock trapped value in underperforming assets. For investors, discounted valuations, record housing demand, and unprecedented policy support create a once-in-a-generation opportunity. The future of New York real estate won't be defined by who has the best listings—it will be defined by who sees the possibilities before everyone else does. And right now, those possibilities are being built, one conversion at a time.

The Skyline Properties Advantage