The pace of office-to-residential conversions in Manhattan has accelerated in the past few years, according to new research from Cushman & Wakefield’s Lori Albert and Reed Hatcher. Conversions that once averaged under 1.2 million square feet annually have spiked to record levels: 1.6 million square feet in 2023, 3.3 million square feet in 2024 and 4.1 million square feet year-to-date as of August, with another 8.8 million square feet on the horizon.

“As older office buildings have struggled to attract tenants in today’s hybrid work environment, with overall vacancy rates still hovering above 20.0%, owners are increasingly looking to residential reuse as a viable path forward,” Albert and Hatcher wrote.

However, stubborn vacancy rates and declining office values are not the only drivers. Titled Rethinking Space: The Rise of Office-to-Residential Conversions in New York City, the report also cites the roles that regulatory initiatives such as the 467-m tax incentive and lifting the floor area ratio cap have played.

Pictured: 675 Third Ave., a Midtown Manhattan office property acquired earlier this year for residential conversion.

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