In the first part of this series, we looked at how unleased office space due to the rise in remote work is hurting cities worldwide, especially New York City. In this installment, we'll look at some of the solutions being offered to fix this problem.
A Win-Win Housing Solution?
In some cities around the world, efforts are being made to convert unused office space into residential apartments, an attractive solution considering that a lack of affordable housing currently plagues cities everywhere.
It wouldn't be the first time Manhattan offices were converted to apartments. After the terror attacks on September 11, 2001, and the 2008 financial crisis, many offices in lower Manhattan were turned into luxury condominiums. But many of those buildings were constructed in the 19th to early 20th centuries and had better natural lighting and other features, making them more attractive for residential conversions. The buildings sitting empty now were mostly built between the 1950s and 1980s, with large floors and less natural lighting, making them more difficult to convert.
While some NYC buildings have already been converted into apartments, it's far from a turnkey solution. Steep costs for conversions and zoning and architectural restrictions make it difficult to turn former office space into homes. For this reason, some cities, like Calgary, offer subsidies to make conversions affordable for developers.
For many of the owners of NYC buildings, converting to residential simply doesn't make sense due to zoning rules that dictate how the space has to be used. Without public/private partnerships similar to those offered in Calgary or lower Manhattan after 9/11, the conversion expense will be hard to recoup.
What Does This Mean for Investors?
With many companies electing to downsize their office space and others moving out of old buildings and into new ones with more amenities, long stretches of Manhattan real estate are currently sitting empty. City leaders know that the current situation is unsustainable, but it remains to be seen if the city will step in to help. In the meantime, the restaurants and stores that previously served the now-missing office workers are closing, too.
If some of the buildings are converted to residential apartments, the retail spaces in the area will again be desirable, and new opportunities for investors will crop up.
Expert Advice is Invaluable
If you're interested in investing in Manhattan real estate, or if you want to protect the investments you already have against market fluctuations like these, you need advice from an experienced attorney who understands New York City real estate.
Melvin Monachan and his team are ready to help you navigate the often-confusing New York real estate world. Call (347) 389-1682 or contact us online today.