New York City office landlords, faced with empty workplaces, could soon have an easier path to rebooting their buildings.
The Real Estate Board of New York, whose members are major developers and office landlords, is proposing that the city and state allow developers to more easily convert offices into apartments, the New York Times reported. In Manhattan, 140 million square feet of less-than-luxurious office space could be converted into apartments. Across the five boroughs, REBNY has identified 210 million square feet of such office space.
Even using 10 percent of that office space for apartment homes would yield 14,000 apartments citywide — enough to make a dent in the city’s affordability crisis, the group reasoned.
Such conversions could be made easier by easing zoning restrictions that require manufacturing, changing density requirements and creating new tax breaks for landlords.
The plan is in response to an increasingly bleak picture for Manhattan’s office landlords. In October, just 10 percent of Manhattan’s one million office workers had returned. Even as news of a vaccine lifted office REIT share prices, some of the work-from-home trends implemented during the pandemic may persist after it is over.
“It would probably be fair to say we haven’t hit bottom yet,” said James Whelan, president of the Real Estate Board of New York.
Although few office workers have returned to their physical places of work, productivity has not suffered. That’s bad news for office landlords whose businesses depend on the value of in-person work to command office rents, which reached a historic high last year of $80.25 per square foot.
“Anyone that thinks the way that people used the workplace in the past isn’t going to change postpandemic is fooling themselves,” said Scott Rechler, CEO of RXR Realty. Rechler’s firm controls 26 million square feet of office space in New York City.
[NYT] — Georgia Kromrei