With more and more people working from home or in a mix of remote and office settings, the amount of empty and unused office spaces in New York has become a major issue. About 18% of the city’s offices are vacant. At the same time, there is still huge demand for housing.
Turning these commercial buildings into housing is not new, but the idea has gained popularity in recent years. In May, around 64 office building owners reached out to the City’s Office Conversion Accelerator program. Four buildings are under or nearly finished construction, positioned to bring around 2,100 new apartments to the market.
It can be a cost-effective and environmentally sustainable investment
Converting empty office buildings into homes has several benefits. First, developers can use the existing infrastructure instead of constructing new buildings from the ground up. This approach is particularly important in densely populated cities like New York, where empty land is limited. It also saves time, money, and resources.
Transforming commercial areas into residential spaces can also increase foot traffic, which can help revitalize local businesses and create a more vibrant community.
It may be a complicated and risky process
The biggest challenge for these conversion projects is that these structures were designed for work, not living. Commercial and residential spaces have different building codes, and meeting residential requirements can be both difficult and expensive. While converting existing buildings is usually cheaper than constructing new ones, it still involves costs like renovations and permits.
Profitability also depends on market demand. Potential residents prefer established residential neighborhoods with amenities, which makes converted spaces less attractive. The rental income from these converted units might not match the investment.
It is a high-risk, high-reward endeavor
As an investor, adapting to market trends is crucial. But while office-to-housing conversions are promising, they are relatively new and not without risks.