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More Office to Residential Conversions on the Way

Another large office-to-residential conversion is underway in the heart of New York City’s Financial District, signaling a shift in the commercial market that’s making waves across the country. Silverstein Properties and Metro Loft, two real estate development firms based in NYC, have joined forces to fully renovate 55 Broad St. over the next 3-4 years. Built in 1967, 55 Broad St. is a 30-story office building that, thanks to the pandemic-induced shift into remote working, is only 2/3rds occupied. After paying $180 million for the building, Silverstein Properties and Metro Loft intend to build a total of 571 residential units, which will range from studios to three-bedroom apartments. Though this project is not nearly as massive as the One Wall Street conversion, the fact that another large-scale conversion project is underway in the same neighborhood speaks volumes about the current state of office buildings in the U.S. 

As vacancies are still an upward trend for office buildings, political leaders and landlords in many cities are looking into the prospect of converting outdated or underutilized commercial buildings into residential space in an effort to help revitalize office areas and address housing shortages. More than 13,000 apartments nationwide were constructed via office conversions over the past two years, particularly in locations like Arlington, Washington, and Chicago. However, these initiatives face structural, political, and budgetary difficulties.

The developers behind 55 Broad believe that the structure is built in such a way that residential conversion is both physically and economically feasible, but a lot of office buildings, particularly those constructed in the last 50 years, feature big floors that aren’t ideal for living space. By requiring windows, yards, and other residential necessities, zoning regulations in many places raise the expense of conversion. Developers who want to convert a bygone office building into a residential unit are at the mercy of their local zoning laws. But if local policymakers are intrigued by the conversions unfolding in NYC, there’s a stark possibility that the trend of office-to-residential conversions could continue in places that weren’t as conversion-friendly before.

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