Office Vacancy, Crashing Values Could Boost Residential Conversions
According to a report by Commercial Edge, a Commercial Real Estate data company, “A spoke in discounted sales of office buildings, historically sluggish market for new leases is making office – to residential conversions increasingly viable in the country's largest metropolitan areas.”
New York City's Department of City Planning is proposing a rezoning of East Midtown, a 73 block area surrounding Grand Central Terminal. The rezoning covers the area bound by East 39th Street to the south, East 57th Street to the north, second and third avenues to the east and a line 150 feet east of Fifth Avenue to the west.
East Midtown historically has been one of the most sought after office markets in New York City. The average age of its office buildings is 70 years old. As these older office buildings become less desirable for office tenants, they become more economically attractive for conversion from office to residential.
According to Peter Kolacyznski, a director at Commercial Edge, “With the continued destruction of office values, we believe the total pool for potential conversions into multi family is larger than initially expected.”
According to New York City Mayor Eric Adams “City of Yes” will make it easier for vacant offices and other nonresidential buildings to become housing, a win win policy to create housing, boost property values and create more active, vibrant neighborhoods in areas that have been hard hit by the effects of the pandemic. City of Yes will breathe new life into our office districts and address our housing crisis.
The City of Yes proposal for Manhattan's Midtown South Mixed Use Plan will encompass 42 blocks. The goal is to foster vibrant 24/7 mixed use neighborhoods in Midtown South.
Lastly, the Commercial Edge reports “Manhattan is the top market that has a significant amount of space rated strongly for conversion.”
To be continued...
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