NEW YORK CITY— The promise behind New York City's office-to-residential conversion push relies on simple supply-and-demand: Turn underused office buildings into homes at a time when rents remain high, and developers face high construction costs, limited land and a maze of regulatory requirements for new housing.
But will adding new homes through office conversions, particularly transforming them into luxury condos, actually make the housing market less expensive?
The trickle-down argument made by supporters of office-to-residential conversions sounds straight out of the Reagan-era playbook: Build at the top of the market, and the benefits will eventually work their way down to renters with lower incomes.
New apartments, albeit luxury units, add supply. Residents move into those new homes, freeing their previous apartments for other renters. Over time, that trickle-down process can create vacancies farther down the housing ladder.
Anisha Steephen, a Roosevelt Institute fellow whose research focuses on rent regulation and housing policy, questions whether that chain reaction will happen quickly enough, or broadly enough, to solve New York's affordability crisis.
In a July 2026 Roosevelt Institute brief, Rent Regulation as Financial Regulation, Steephen argues that the nation's affordability crisis is not solely a question of supply.
"There is no question that we need more housing units to house all the people that we have in the city," Steephen told Patch.
But she said New York's housing market does not behave like a textbook market in which residents move freely whenever prices change.
"New York is such a sticky housing market," she said.
People can remain in apartments because they are connected to their neighborhoods, schools, jobs or social networks.
Construction takes years. Affordable housing development can take even longer.
That means a new apartment building can add supply without immediately making an existing renter's apartment affordable.
A converted office building can create hundreds of apartments in a neighborhood with extremely high rents.
Yet the people who need lower rents may not be able to afford the new apartments, even if some of the units eventually become available to them.
That is why 467-m requires an affordable component rather than relying entirely on market-rate apartments.
The program permanently rent stabilizes its required affordable units and requires them to be distributed among specified income bands.
The City can create apartments from obsolete offices, but whether those apartments improve affordability depends on who finances them, what rents they command and what protections accompany them, she finds.
The City's Office Adaptive Reuse Task Force has identified office conversions as one way to create housing without relying entirely on new construction.
More than 70 Manhattan office buildings are currently being converted to residential use, according to the city Department of Buildings.
Its recommendations included allowing most office buildings constructed in 1990 or earlier to convert to residential use, a change the City estimated could create homes for as many as 40,000 New Yorkers over 10 years.
New York also created the 467-m tax incentive program to make conversions financially viable.
Eligible projects must generally convert nonresidential buildings into rental housing with at least six units and meet specific affordability requirements.
At least 25 percent of the apartments must be affordable, with a weighted average affordability level of no more than 80 percent of area median income.
For a four-person household in New York City, 80 percent of AMI is about $116,000 in 2026.
Therefore, affordable units could include apartments for households earning substantially less.
For example, a mix of units for families earning around $58,000, $87,000 and $116,000 a year— as long as the required average stays at or below the 80 percent threshold.
At least 5 percent of the affordable apartments must be designated for households at 40 percent of AMI, and the highest income band cannot exceed 100 percent of AMI. The affordable units must remain rent stabilized.
For developers, the tax benefit can determine whether an otherwise marginal conversion works financially.
Adam Laver, a real estate partner at Blank Rome, described development incentives as potentially decisive for adaptive-reuse projects.
"The availability (or lack thereof) of development incentives can absolutely make or break the viability of potential adaptive reuse projects," Laver told Patch in an email.
The 467-m program offers its largest benefits to projects that begin construction earlier.
Under the City's program structure, eligible projects beginning construction in 2026 can receive a 35-year tax exemption, compared with 30 years for projects beginning in 2028 and 25 years for projects beginning in 2032.
That structure was designed to push projects forward quickly.
And then, there's the question on everyone's mind after the Pfizer building's near-collapse: Can the city push these conversions forward quickly without compromising safety?
An office floor and an apartment floor have fundamentally different requirements.
Bedrooms need natural light and ventilation. Apartments require kitchens, bathrooms and residential plumbing.
Buildings must meet residential fire, egress and life-safety requirements.
The first question developers must ask, according to Laver:
"Does the Zoning Code permit multi-family residential use?"
The city Department of Buildings classifies nonresidential-to-residential projects as alterations involving multiple dwelling units.
Such projects can involve changes to egress, zoning use, building-code occupancy classification and the issuance of a new or amended certificate of occupancy.
Laver said concerns that conversions are broadly escaping safety oversight are not supported by the permitting system.
"Residential safety and building standards are highly regulated and enforced," Laver said. "The permitting approval process includes multiple layers of checks and balances to safeguard the public."
After the Pfizer incident, the Department of Buildings inspected 180 New York construction sites connected to firms involved in the project.
According to the department, inspectors found no hazardous structural problems at the sites examined. Three violations were issued at 24 conversion projects, including one stop-work order for poor lighting that was later lifted.
Steephen said the technical requirements themselves are not necessarily the problem.
The challenge, she said, is ensuring the City has enough capacity to monitor a large number of complicated projects, particularly when developers face incentives to move quickly.
"I do think again, more monitoring, making sure the construction is happening well," Steephen said.
Steephen describes conversions as an "opportunistic event" for commercial property owners: Older, less competitive office buildings can acquire a new use as demand for traditional office space changes.
Her research argues that housing has become increasingly intertwined with financial markets.
In her Roosevelt Institute paper, she describes multifamily housing as a financial asset class and examines how expectations about future rents can influence the value and financing of apartment buildings
In that context, a building's value is not determined just by the people who live there.
Investors, lenders and financial markets can also shape the incentives governing the property.
Investment shouldn't disappear, Steephen explained.
Instead, she argues that policy should support investments that keep housing affordable over the long term, rather than investments that depend on steadily raising rents.
"Rent regulation is really seen as something that is not for new housing; it's for existing housing," she said.
She also argues that the financing system gives private developers an advantage over nonprofits and other ownership models that may prioritize long-term affordability over maximizing returns.
Her proposed alternative: don't abandon private development, but broaden the pool of participants through stronger public subsidies, direct government capital and greater opportunities for nonprofit housing providers.
"We need more housing," Steephen said. "But does it need to be fully controlled by the private sector and private capital?"
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