{"id":6546,"date":"2025-10-17T15:59:23","date_gmt":"2025-10-17T15:59:23","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/6546\/"},"modified":"2025-10-17T15:59:23","modified_gmt":"2025-10-17T15:59:23","slug":"nycs-midtown-reshaped-by-office-to-apartment-conversions","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/6546\/","title":{"rendered":"NYC\u2019s Midtown Reshaped By Office-to-Apartment Conversions"},"content":{"rendered":"

By Natalie Wong<\/a>Rachael Dottle<\/a>Marie Patino<\/a> October 6, 2025 <\/p>\n

Roughly two blocks from Manhattan\u2019s Grand Central Terminal, construction workers are stripping down the former Pfizer Inc. headquarters to its columns, beams and concrete slabs.<\/p>\n

The office towers are expected to be turned into roughly 1,600 rental apartments, rife with amenities such as a rooftop pool and fitness center. For now, contractors are pouring a new floor every four days to try to meet the 2026 opening.<\/p>\n

The developers, Metro Loft and David Werner Real Estate Investments, are tackling the biggest office conversion project in the US.<\/p>\n

\u201cIt\u2019s quite a bit of surgery,\u201d said Robert Fuller, a principal at Gensler, the architectural firm behind the Pfizer conversion. \u201cThere\u2019s just a lot of technical challenges and unique conditions from floor to floor. All those things collectively make this quite a unique endeavor and I would argue probably more challenging than any other one I can think of.\u201d<\/p>\n

More construction is a welcome relief. Crunched by a housing shortage, the city\u2019s residents are facing rents that are hovering near records<\/a> and more expensive condos and co-ops. Price pressures have driven politicians including Mayor Eric Adams and Governor Kathy Hochul to greenlight financial incentives and zoning changes that could encourage developers to take the office buildings that emptied out during the pandemic and turn them into more housing.<\/p>\n

New York\u2019s housing crisis has also come into stark focus as the city prepares for a heated mayoral election in November. Zohran Mamdani, who won the Democratic primary, has been pushing to freeze rents on the city\u2019s stock of rent-stabilized apartments. That could throw a wrench into developers\u2019 calculations on projects, as many companies are relying on a tax break that requires them to include those types of units in their buildings.<\/p>\n

But that incentive \u2014 called 467-m \u2014 allows for tax abatements for as much as 35 years. In order to qualify for the tax benefits, at least 25% of the housing units have to be affordable. The major benefit of the tax incentive is eliminating some uncertainty around property taxes, according to Nathan Berman, managing principal and founder of Metro Loft, which has done 15 projects downtown.<\/p>\n

\u201cNobody knows where the next administration in the city, where they will be going in terms of taxes, and 467-m eliminates that uncertainty,\u201d he said. \u201cFor 35 years \u2014 which is huge \u2014 you can actually quantify everything.\u201d<\/p>\n

Conversions can\u2019t be done to every building. Newer buildings are often tougher to carve into residences. Dividing large office floorplates into individualized apartments and making sure each has access to windows can be tricky. And many buildings still have some office tenants locked in for long leases, complicating any paths to conversion.<\/p>\n

The projects aren\u2019t always a perfect balm for New York City\u2019s affordability squeeze either. While a portion of the apartments are affordable, market-rate rents have been on the rise. In August, Manhattan\u2019s median rental price for new leases was $4,600, up 8.4% from a year earlier, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman.<\/p>\n

Despite these obstacles, conversions are booming and helping to repurpose swaths of empty office space that popped up more during the pandemic. The rise in remote work caused some employers to back off on their real estate footprints, while tenants also started preferring new or renovated buildings with top amenities to lure employees back.<\/p>\n

Shifting demand, combined with higher interest rates, has been weighing on office prices, making many buildings cheaper. Since December 2019, a measure of US office prices has slumped nearly 11% through August, according to MSCI Inc. data.<\/p>\n

\u201cMidtown is heating up,\u201d said Doug Middleton, a CBRE broker that has worked on several conversion deals. \u201cIt\u2019s probably the most competitive product that we\u2019re seeing in New York City right now.\u201d<\/p>\n

Conversion Projects Move to Midtown <\/p>\n

Net new units in approved conversion and alteration projects in Manhattan by permit filing date<\/p>\n

Sources: NYC Department of City Planning and NYC Department of Buildings<\/p>\n

Note: Neighborhoods based on Community District boundaries. Only includes buildings with more than 10 net units added that filed permits between 2010 and Q2 2025. Number of net units is based on Department of Buildings permit filings and are subject to change during development.<\/p>\n

Demand for office space has started to rebalance slightly in recent months, but US landlords are still struggling with a vacancy rate that was about 23% at the end of the second quarter, according to Jones Lang LaSalle Inc.<\/p>\n

Five years after the pandemic\u2019s start, conversions are starting to have an impact. The pipeline of those projects totaled 81 million square feet (7.5 million square meters) as of May 2025, up from 71 million square feet just six months ago, according to CBRE Group Inc.<\/p>\n

And in New York City, the projects are shifting northward. Decades ago, developers set their sights on towers in the Financial District, also known as FiDi. Art Deco- or Gothic Revival-style buildings offered an attractive conversion opportunity, with historic facades and smaller floorplates that were easier to divide and let in more light. An array of financial incentives in the 1990s and zoning changes lured developers to those buildings.<\/p>\n

The area around Wall Street was also stuck with more empty offices after the early 1990s recession, the Sept. 11 attacks and the Great Financial Crisis of 2008 pushed companies to seek out new spots further north in Manhattan. That resulted in cheap, vacant commercial buildings downtown that were easier to revamp.<\/p>\n

But since the pandemic, developers converting old office towers started moving uptown as well. As of early September, there are 12.4 million square feet of conversion projects underway or planned in Manhattan \u2014 equivalent to more than four Empire State buildings, according to CBRE Group Inc. About half of those are located in Midtown.<\/p>\n

\"A <\/p>\n

Redevelopment of the former Pfizer headquarters towers has begun, with offices being converted into residences. Photographer: Heather Khalifa\/Bloomberg<\/p>\n

On an August afternoon, Metro Loft\u2019s Berman is standing on a platform extension some 250 feet above ground level. He\u2019s overlooking the more than 200 workers toiling away at the Midtown site.<\/p>\n

A light well stands between the two buildings, located at 219 and 235 E. 42nd St., helping to illuminate apartments in the core of the towers. The lobby had been stripped down to steel beams. The black marble floor, which will be replaced with new stone, was caked in a heavy layer of dust.<\/p>\n

On the 23rd floor, a robot has drawn an outline on the concrete for the 16 studio- and one-bedroom units that will be built there. The original tinted windows, still in place, will be ripped out and replaced with more energy-efficient ones. Of the roughly 1,600 apartments in the completed building, about 400 of those will be considered affordable and rent-stabilized.<\/p>\n

One of the alluring parts of conversions for cities and residents is the speed in which the buildings can turn into housing sooner than ground-up construction. Metro Loft\u2019s Berman has said that converting an old building is typically less expensive than starting from scratch \u2014 partially because of the quicker time to get construction going and secure approvals.<\/p>\n

Midtown Is the Least Residential Area in Manhattan <\/p>\n

Floor area use by square footage of community districts<\/p>\n

Percentage of square footage allocated to: Residential Non-residential <\/p>\n

\u201cThat\u2019s what makes conversions exciting for us \u2014 the immediacy of it,\u201d Berman said during a tour of the construction site. \u201cYou buy a building and maybe 18 months later, you\u2019re renting apartments. That type of schedule doesn\u2019t exist for ground up. You\u2019re lucky if it\u2019s year seven that you rent it.\u201d<\/p>\n

Why Midtown <\/p>\n

For years, the bulk of the projects were concentrated in downtown in part because the buildings are often older in that area. In general, the city limited Midtown conversion projects to buildings that were built before December 1961, and before January 1977 for properties in the Financial District. But regulations have loosened in the past year, making it easier for developers to target newer properties.<\/p>\n

A weak office market has helped as well. Elevated interest rates, and demand pressures from the rise in remote work, have weighed on the valuations of office buildings. At the former Pfizer headquarters, Metro Loft\u2019s Berman saw a chance to finally make his mark on Midtown \u2014 a feat made possible by the plummeting valuations.<\/p>\n

\u201cIt\u2019s literally a neighborhood within the shell of a building,\u201d said Berman. \u201cWith all the low-rise products in some of these other neighborhoods, you would need to literally take multiple blocks to get the amount of people that we\u2019re going to have living in here.\u201d<\/p>\n

\"Construction\"Construction <\/p>\n

Contractors renovate the lobby of the former Pfizer headquarters. The 23rd floor of the former Pfizer headquarters is being transformed into studio and one-bedroom apartments. Photographer: Heather Khalifa\/Bloomberg<\/p>\n

Across Midtown, developers are taking offices that once housed Ernst & Young\u2019s headquarters and turning those into housing. Developer Vanbarton Group is revamping<\/a> the longtime home of the Archdiocese of New York into apartments in a project that is expected to cost about $340 million for acquiring and converting the building, Bloomberg News previously reported.<\/p>\n

At 750 Third Ave., SL Green Realty Corp. is turning a 35-story tower built in the 1950s into more than 600 apartments. And on Billionaires\u2019 Row near Central Park, TF Cornerstone is converting an office tower into 350 apartments.<\/p>\n

Cumulative office rental square footage removed from Manhattan<\/p>\n

Source: CBRE<\/p>\n

The slate of projects is finally starting to chip away at the amount of office space for rent. Since 2023, Manhattan\u2019s office supply has fallen nearly 2% to 416 million square feet, according to CBRE.<\/p>\n

New York has vaulted to the top of lists for office conversions, outpacing cities including Chicago and Washington. Part of that is because Manhattan is simply the largest office market in the country, which leads to more buildings that can be converted. Developers have been more attracted to conversions given the distress in the office market and New York\u2019s housing shortage and elevated rents. Plus, the city and state\u2019s incentives have helped with the economics of projects.<\/p>\n

Square footage of current and planned conversion projects as of Q2, 2025<\/p>\n

Source: CBRE<\/p>\n

\u201cConversions help us solve two pressing problems: A housing crisis with skyrocketing rents because we have too few homes and older office buildings that in some cases are struggling to attract tenants,\u201d said Dan Garodnick, the chair of the New York City Planning Commission.<\/p>\n

Metro Loft\u2019s Berman has worked on conversions around the city. He recently worked to turn JPMorgan Chase & Co.\u2019s former back offices into more than 1,300 apartments downtown \u2014 the most complicated one he\u2019s done yet. That deal required cutting two light wells in the middle of the tower to allow for proper light and air.<\/p>\n

Leasing began this year, and demand has been high \u2014 tenants were especially drawn to the 100,000 square feet of amenities that included a gym, spa and pickleball courts.<\/p>\n

The size of the Pfizer conversion \u201callows us to provide the kind of amenity packages that smaller buildings simply can\u2019t afford to offer and it distinguishes these types of projects from a lot of the smaller boutiquey buildings,\u201d Berman said.<\/p>\n

Zoning Rules <\/p>\n

State and local lawmakers have introduced more incentives over the years that have helped ease some of the challenges faced by developers wanting to revamp the buildings. Late last year, Mayor Eric Adams passed a plan<\/a> that\u2019s expected to help create as many as 82,000 housing units over the next 15 years. He also oversaw a program that helps accelerate office-to-residential conversions, whose pipeline includes projects like the conversion of the former Ernst & Young headquarters at 5 Times Square.<\/p>\n

As part of that, the city lowered the age of buildings that could be converted and expanded the locations where properties were eligible. The state also lifted a cap that restricted the density of a building, allowing for much bigger developments. Most recently, in August, the city passed zoning changes that would affect an area of Manhattan known as Midtown South. Now developers can build residential properties there, which could result in more than 9,500 homes.<\/p>\n

Rezoning Midtown South Means 9,500 Potential New Homes <\/p>\n

Source: NYC Department of City Planning<\/p>\n

On the conversion of the Archdiocese, developer Vanbarton said that with the 467-m tax incentive, property taxes will cost only about 3% of the building\u2019s effective gross income, compared with roughly 25% without.<\/p>\n

\u201cYou\u2019ve solved your real estate tax issue and uncertainty for 35 years \u2013 there\u2019s a price to pay for that, and it works,\u201d Berman said. \u201cThe city is getting much-needed affordable units, which otherwise would just not be produced.\u201d<\/p>\n

Midtown Future <\/p>\n

To look at the potential impact of conversions in Midtown, New Yorkers don\u2019t have to venture far. Lower Manhattan, the section of the borough that\u2019s south of Chambers Street, has turned more than 26 million square feet of offices into housing since 1995, according to the Alliance for Downtown New York, a nonprofit group that handles the business improvement district in the area.<\/p>\n

Major projects continue to open up in that section of Manhattan. Renters started to move into Goldman Sachs Group Inc.\u2019s former offices at 55 Broad St. last year. And Metro Loft has started demolition at 111 Wall St. to build more than 1,500 apartments.<\/p>\n

A Wave of New Apartment Buildings Is Set to Take Over Midtown Manhattan <\/p>\n

\u201cOffice to residential conversions are a win-win here: they offer some relief to struggling commercial real estate, they create much needed new housing and they help us create more vibrant 24\/7 neighborhoods in our central business district,\u201d Garodnick said.<\/p>\n

The office market has started to recover too. In Manhattan, new office leasing in the first eight months of this year was up 38% from a year ago, according to CBRE. The vacancy rate in August was down to about 14% from roughly 16% at the start of 2024.<\/p>\n

But there\u2019s still a vast amount of unused space that some developers and lawmakers argue could be put to better use. According to CBRE, if all of the planned and rumored conversion projects were to be completed, it would eliminate another 21 million square feet of offices, a 7% reduction from 2023.<\/p>\n

\u201cWe\u2019re taking the limping office buildings off the market,\u201d Berman said.<\/p>\n

Edited by Katherine ChiglinskyKate Rabinowitz With assistance from Ann Choi <\/p>\n","protected":false},"excerpt":{"rendered":"By Natalie WongRachael DottleMarie Patino October 6, 2025 Roughly two blocks from Manhattan\u2019s Grand Central Terminal, construction workers…\n","protected":false},"author":2,"featured_media":6547,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[1912,5888,5891,5889,2907,1445,75,84,83,9,24,63,443,5890,1491],"class_list":["post-6546","post","type-post","status-publish","format-standard","has-post-thumbnail","category-manhattan","tag-adams","tag-bloomberg-graphics","tag-city-of-yes","tag-graphic","tag-housing","tag-mamdani","tag-manhattan","tag-manhattan-headlines","tag-manhattan-news","tag-new-york","tag-new-york-city","tag-nyc","tag-nyc-housing","tag-office-conversions","tag-real-estate"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/6546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=6546"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/6546\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/6547"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=6546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=6546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=6546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}