Don’t Rush the Analysis When Converting a New York Office Building

Two realities are driving New York City’s office-to-residential boom: a growing inventory of underperforming office buildings, and a housing shortage projected to require 560,000-plus new units by 2030, according to a 2022 AKRF report prepared for the Real Estate Board of New York.

Against that backdrop, office conversions are being positioned as the next best solution for developers and the city. 

But, after working with developers on several projects, I’ve found that the biggest conversion risks are generally the ones teams don’t anticipate early enough.

Owners and operators still approach conversions assuming they will be significantly cheaper and faster than the cost of new construction. Sometimes that’s true, but the reality is nuanced.

Project success depends on selecting the right building, understanding infrastructure challenges, and making decisions early once the process begins.

Not every office building can — or should — be converted.

Ideal candidates tend to fall into three categories: landmark buildings, as shallower floor plates and generous window spacing adapt to residential layouts; overbuilt buildings, which have more square footage than current zoning allows, creating value; and hybrids with varied floor plates, which are highly adaptable and already lend themselves to residential layouts.

The most difficult are midblock properties with deep, uniform floor plates and limited access to natural light. Once teams introduce major interventions — carving out light wells, relocating cores, extending elevators, reinforcing slabs or adding infrastructure — project economics can often become strained.

We’ve seen efforts where conversions matched or exceeded new construction costs. Conversely, unexpected conditions revealed during demolition or structural review required redesign that erased anticipated savings.

That’s why early feasibility analysis is so important. Projects that move efficiently are often the ones with the clearest vision upfront. “The key to a successful office-to-residential conversion is recognizing that time and space are the same problem,” said Daniel Berman, executive director at MetroLoft, a development firm that has done a lot of conversions. “Every hour you invest upfront stress testing layouts and unit mixes is what produces the highest and best use of the building.”

That discipline is critical, as office buildings were never designed to support residential infrastructure at scale. Adding hundreds of kitchens, baths and associated infrastructure requires new plumbing, vertical shafts, electrical upgrades, ventilation, sprinklers and reworked mechanical coordination. Even straightforward conversions can demand invasive coordination once construction begins.

Owners and project teams often underestimate how much a building’s geometry dictates the final product. Midcentury floor plates tend to extend 60 to 70 feet from the window wall to the core. For residential, anything beyond 30 to 35 feet limits access to natural light and ventilation. As a result, many conversions skew toward studio and one-bedrooms, as those are the best layouts suited for deeper floor plates.

That may create broader, future market implications as thousands of units become available across Midtown and other emerging districts. The issue is not whether units will lease — as New York demand will likely dictate — but whether areas will become oversaturated with one type of housing while also lacking the infrastructure needed to support balanced, livable communities.

That said, pressure to move is intensifying. New York’s 467m tax incentive program has accelerated things, as developers race to meet deadlines tied to the program’s most favorable abatements.

“The biggest thing we’ve learned doing office-to-residential conversions is that conviction beats deliberation,” said Berman. “Knowing your vision upfront enables early decision-making, the ability to pivot when the building throws a curveball, and avoiding analysis paralysis that kills deals.”

This mindset will be essential as more owners and operators enter the conversion market. The next phase of office-to-residential projects will not be defined by policy incentives or market demand, but by execution: choosing the right building, understanding limits, and recognizing that adaptive reuse is rarely as simple as reusing what already exists.

New York City conversions offer promising and game-changing opportunities in real estate. Done thoughtfully, they can reduce vacancy, create housing, and help transform business districts into active, mixed-use neighborhoods. But successful conversions require clear-eyed analysis from the outset. The buildings themselves ultimately determine both the opportunity and the limits of what’s possible.

Harshad Pillai is a director at architecture firm Fogarty Finger.