The Past and Future of Non-Residential-to-Residential Conversions in New York City

Abstract

Concerns over rising office vacancy rates and falling office building property values in many urban areas have increased the pressure on cities and developers to consider converting underused office space to residential use. To aid in current and future conversations surrounding the feasibility of conversion, we look to the recent past. In doing so, we provide an account of conversion and redevelopment activity in New York City over the past decade to uncover associated structural and locational characteristics. We find that office-to-residential conversions contributed the greatest share of residential rental units of all non-residential conversions from 2010 to 2020, with nearly 5,900 units created. Via a probit model modeling the probability of conversion or redevelopment, we find that hotels have the highest conversion probability, followed by loft, retail, industrial, and office. Apart from building classes, the number of stories is the strongest determinant of conversion, followed by building age and assessed value.

Keywords: Conversions, commercial real estate

JEL Classification: R30, R32, R33