Three New York state Democrats introduced legislation (S.9259/A.10192) to create a tax credit to incentivize converting underused office buildings and space into residential housing, they announced Tuesday.
State Senate Assembly Majority Leader Crystal Peoples-Stokes (D-Buffalo); Assemblymember John McDonald, D-Cohoes) and state Sen. Pat Fahy (D-Albany) said the bill would offer a refundable tax credit equal to 10% of qualified rehabilitation costs as a result of those conversions.
Eligible projects must be in cities, towns, or villages with populations under 1 million, and at least 50% of the building must be vacant and converted to residential use. The bill also creates a new tax credit to apply to historic rehabilitation projects that meet the same residential conversion goals.
A lot of downtown office space across the state continues to sit empty nearly six years after the beginning of the COVID-19 pandemic forced and revolutionized remote work. According to the lawmakers, in downtown Albany, the office vacancy rate now exceeds 27%, and the regional vacancy rate stands at 14%. In the city of Buffalo, overall office vacancy has climbed to roughly 16% regionally, with prime downtown office space exceeding 20% vacancy. In Rochester, the office vacancy rate has risen to almost 28%. This all comes as the state sees an affordable housing shortage. Studies estimate that more than 800,000 additional housing units will be needed over the coming decade in New York state.
“New York is in a housing crisis as homeowners and renters struggle to find homes they can afford in communities across the state. Office buildings, previously full of employees prior to the pandemic, now sit empty in downtowns like Albany, Buffalo, and Rochester, and our legislation adds another critical tool in the toolbox for municipalities and developers to begin large-scale conversion projects,” Fahy said in a statement. “New York needs to build, convert, and get creative about solutions, and that begins with using every tool at our disposal to address both the housing crisis and rising vacancy rates in cities across upstate.”
Across the country, the number of office-to-apartment conversions has skyrocketed from 23,100 in 2022 to a record-breaking 70,700 in 2025, the lawmakers said. Office-to-apartment conversions now make up almost 42%.
“The cost of housing has become unaffordable for far too many people in Buffalo and in so many other communities across the State. We need to explore all options to address this problem and make sure as many new residential units are coming into the market as possible to drive prices down,” Peoples-Stokes said in a statement. “There is a significant amount of unused office space throughout the state that could be converted to residential units. Providing state tax credits is an appropriate incentive to promote converting unused office space into residential housing.”