Revitalizing Manthan Downtown: Breathing new life into the urban core

Vanbarton Group is overseeing the transformation of a former office building in downtown Manhattan into 588 rental apartments, complete with modern amenities such as a catering station, lounge area, fire pit, and gas grills. Currently on the 31st floor, construction workers are installing steel supports to accommodate these residential features. The building has been vacant since 2021 and will now offer market-rate housing to approximately 1,000 individuals.
Throughout the country there is a growing trend of transforming office spaces into residential units, viewed as a possible solution to revitalize struggling downtown business districts that experienced a significant decline during the pandemic and may not fully bounce back. These conversions place a strong emphasis on creating affordable housing options. 
Various cities are now offering substantial tax incentives to developers, encouraging them to undertake office-to-housing conversions, on the condition that a specific percentage of the apartments are made available at below-market rates, ensuring affordability for residents.
Pittsburgh made an announcement in January, stating its willingness to consider proposals that focus on generating additional affordable housing by repurposing inactive or underutilized office spaces. In October, Boston unveiled a revitalization plan for its downtown area, which specifically highlighted the need for increased housing, with a portion of it expected to be achieved through office conversions. Similarly, Seattle initiated a competition in April, inviting downtown building owners and design firms to submit innovative ideas for converting office buildings into alternative uses.
Office-to-housing conversions have become a key focus of Mayor Muriel Bowser's strategy to rejuvenate and repopulate the downtown area of the nation's capital. In her recently unveiled "comeback plan" for the city, Mayor Bowser aims to attract an additional 15,000 residents to the downtown district, supplementing the existing population of approximately 25,000.
However, there are skeptics of the office-to-housing conversion movement. Housing advocates express concerns that the requirements for affordable housing might be diluted. Even proponents of the conversion approach believe that offering tax breaks to affluent developers may not be the most effective method to achieve the desired outcome. As more employers adopt hybrid work models, a question arises regarding whether individuals will choose to relocate to downtown areas if they are not required to be present every day.
As downtown office buildings continue to experience increasing vacancy rates, rising from 12.2% in the fourth quarter of 2019 to 17.8% in the first quarter of 2023, there is an urgent need to take action. Several cities have been significantly impacted, including San Francisco with a preliminary vacancy rate of 29.4%, Houston at 23.6%, Philadelphia at 21.7%, and Washington at 20.3%.
In New York City, where the vacancy rate stands at 15.5%, Mayor Eric Adams announced a plan in January to introduce 500,000 new homes to the city, with a focus on rent-restricted units. A crucial aspect of this plan involves rezoning certain parts of Manhattan, which currently restricts the usage of spaces to offices and manufacturing only. 
In addition to the rezoning efforts, the mayor's office is actively promoting bills in the legislature to approve tax incentives aimed at attracting developers to invest in conversions that incorporate affordable housing units. They are also seeking changes to the state's multiple dwellings law, allowing buildings constructed prior to 1990 to benefit from more flexible regulations, thereby facilitating the conversion process.
According to CBRE, New York has seen the highest number of office-to-residential conversions in the country, with nearly 80 buildings repurposed over the past 20 years. John Sanchez, the executive director of the 5 Borough Housing Movement, which advocates for conversions, suggests that approximately 200 more buildings could potentially be converted into residences within the next decade. This would provide housing for around 20,000 individuals.
The office-to-residential conversions are acknowledged for transforming lower Manhattan from a neighbourhood that lacked activity after sunset into a highly desirable destination for families and food enthusiasts. However, relying solely on office-to-residential conversions in New York and other places is unlikely to completely revive entire downtown neighborhoods, nor will it automatically alleviate the affordable housing crisis. 
According to a report by CBRE in March, office-to-home conversions accounted for only approximately 1% of new multi-family projects, and there is no substantial evidence to suggest that they have made a significant impact despite the attention they have received.
Lastly, conversions of such buildings into residential apartments are extremely challenging. Many buildings are not well-suited for conversion due to factors such as limited access to natural light and fresh air, and the requirement to install numerous bathrooms and kitchens. In addition to the challenges of installing plumbing in buildings originally designed with just a few large bathrooms per floor, there can also be environmental concerns. 
Other hurdles in the conversion process include securing financing, dealing with existing leaseholders, and navigating zoning regulations. For instance, Washington, D.C. has numerous federal buildings that are off-limits for conversion due to their specific governmental functions, creating further challenges in repurposing these structures.
The trend of converting office spaces into residential units is gaining traction across the country as a solution to revive struggling downtown districts. While some cities are offering tax incentives to developers to encourage affordable housing, others have expressed concern about dilution of the requirements. However, there are challenges associated with the conversion process, including securing financing, dealing with existing leaseholders, and navigating zoning regulations.