Office-to-Apartment Conversions Are Booming in NYC—Here’s Why

New York City’s skyline is undergoing a major transformation—not with brand-new towers but by turning outdated office buildings into modern apartments. Thanks to new state and city policies, nearly 19,000 residential units are expected to be created from former office spaces over the next eight years, adding to the 5,500 units already converted since 2010.

Why This Shift Is Happening

The shift toward office-to-residential conversions has been fueled by two major government initiatives:

1. State Tax Incentives – Property owners who convert office buildings into apartments can receive tax abatements, provided that 25% of the new units are designated as affordable housing.
2. Expanded Eligibility for Conversions – Mayor Eric Adams’ City of Yes plan made it easier to convert buildings by allowing structures as new as 1991 to qualify for conversion. Previously, eligibility was limited to buildings constructed before 1961 or 1977, depending on location.

Previously, most conversions were concentrated in lower Manhattan, particularly the Financial District. However, with these changes, conversion projects are now happening all across the city, including in Midtown and beyond.

Conversions: A Cost-Effective Alternative to New ConstructionBuilding a brand-new high-rise in NYC is a long, expensive process—often taking five or more years just to plan and finance, before even breaking ground. In contrast, conversions can be done faster and at a significantly lower cost.

For example, converting 5 Times Square—once the headquarters of Ernst & Young—into 942 apartments is expected to cost $95 million. Compare that to constructing a new high-end tower of the same size, which could cost nearly $500 million.Challenges of Converting Offices to ApartmentsWhile conversions are often cheaper and faster than building from scratch, they come with their own set of challenges:

• Building & Fire Code Compliance – Office buildings were never designed for residential use, meaning major upgrades are needed to meet housing regulations.
• Window Requirements – Many office buildings have deep floor plans that lack sufficient windows for apartments, requiring expensive facade redesigns or internal courtyards.
• Plumbing & HVAC Overhauls – Offices have centralized HVAC systems and communal bathrooms that must be completely reworked for residential living.

Major Office-to-Apartment Conversions UnderwayHere are some of the most notable office-to-residential conversion projects happening in NYC:5 Times Square

• Once home to Ernst & Young, this 38-story tower is being converted into 942 apartments.
• Expected cost: $95 million.
• Timeline: TBD.

219 & 235 E. 42nd St.

• A former Pfizer office complex being transformed into 1,600 apartments.
• 19 stories are being added on top of the original 10-story structure.
• Expected completion: 2027.

111 Wall St.

• A 25-story office tower, previously occupied by Citigroup, is being converted into 1,600 rental units.
• The redesign will add river and harbor views, plus high-end amenities like an open-air rooftop pool and jogging track.
• Timeline: Work to begin in a few months.

Flatiron Building

• One of NYC’s most iconic buildings is being transformed into 38 luxury condos.
• Completion expected by 2026.

750 Third Ave.

• A 34-story office tower losing 13 floors on one side for a new “winter garden” and gaining 11 new floors on the other.
• The project will add 639 rental apartments and cost $805 million.
• Demolition starts mid-2025.

25 Water St.

• Formerly a “window-less, joyless hellhole” for JPMorgan Chase employees, this 22-story building is gaining ten new floors and a redesigned glass facade.
• The finished project will have 1,320 apartments and 100,000 square feet of luxury amenities.
• First units will be ready by February 2026.

‍

What This Means for NYC Real EstateFor investors and developers, office-to-residential conversions represent a unique opportunity. These projects are faster, cheaper, and more financially viable than building from the ground up, while also helping to meet NYC’s urgent need for more housing.For renters and buyers, these conversions will offer modern, centrally located apartments in previously commercial areas, often with unique layouts and high-end amenities. With demand for housing continuing to outpace supply, these transformed buildings will likely lease up quickly.As NYC continues to evolve post-pandemic, office conversions are proving to be a win-win for both property owners and residents.

‍

Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.

‍