City Hall Releases Report Recommending Regulatory Changes to Facilitate Office Conversions

On Jan. 9, 2023, the city’s Office Adaptive Reuse Task Force issued its report titled the “New York City Office Adaptive Reuse Study.” The Task Force was established to study the potential for the conversion of vacant office space in New York City to other uses and to make recommendations for legislation and policy in furtherance of that objective.

The Task Force’s recommendations focus on easing the regulations that govern the adaptive reuse of office buildings — specifically those contained in the Zoning Resolution and the Multiple Dwelling Law (MDL) — and the consideration of a tax incentive to support the inclusion of affordable housing in conversions. The proposed changes to the Zoning Resolution must go through the city’s land use review processes, and the proposed changes to the MDL must be approved by the state legislature. The recommendations fall into three general categories:

Expand the Range of Buildings Eligible for Conversion

• Expand the date range of buildings eligible to use the conversion regulations available under the Zoning Resolution to buildings constructed before Dec. 31, 1990. The conversion regulations are currently available to buildings constructed prior to Dec. 15, 1961, or Jan. 1, 1977 in Lower Manhattan. The report estimates that this change would facilitate the potential conversion process for 120 million square feet of office space.
  
  
• Expand the geographic range of buildings eligible to use the conversion regulations to all high-density commercial districts (areas designated as C4, C5 or C6 zoning districts), including Downtown Flushing and the Bronx Hub. The report estimates that this change would ease the potential conversion process for an additional 16 million square feet of office space. For buildings outside of eligible areas, the report suggests that conversion under these regulations could be allowed by discretionary action of the City Planning Commission.
  
  
• Evaluate opportunities to allow housing, whether through conversions or new construction, in centrally located districts between West 23rd Street and West 41st Street in Manhattan that are zoned as Manufacturing Districts and that currently prohibit residential development. Presumably, this objective would be achieved through a rezoning of these areas.

Make Existing Conversion Regulations Work Better

• Allow office buildings to convert to a broader array of housing types, such as supportive housing (which may be categorized as a community facility use). Currently, offices can only convert to residential dwelling units as defined in the Zoning Resolution.
  
  
• Amend the MDL to allow residential uses to exceed a maximum floor area ratio of 12.0 when converted from office use. This would provide flexibility to convert all existing square footage in an office building into housing.
  
  
• Eliminate off-street parking requirements for conversions to create broader flexibility for the reuse of buildings.

Provide Financial Incentives for Affordable Housing and Childcare Facilities

• Explore and pursue a tax incentive to support mixed-income housing in conversions. The report notes that analysis showed that while conversion of an entire individual office building to affordable housing is generally infeasible, conversion to mixed-income housing could be achievable through a property tax-based incentive.
  
  
• Implement a property tax abatement to incentivize retrofitting office space for childcare centers in furtherance of Mayor Adams’ Blueprint for Childcare & Early Childcare Education.

The report notes that conversion remains a narrow pathway for office building owners due to a variety of architectural, regulatory and financial factors. However, the report marks an important step in identifying the existing regulatory obstacles to conversions and suggesting ways to eliminate them. The report urges that “[t]he recommendations outlined by the Task Force should be implemented expeditiously via statutory changes in the 2023 New York State legislative session, with any other necessary regulatory changes implemented through a New York City zoning text amendment.” We could not agree more and will continue to monitor these proposals.

Please contact Kramer Levin’s Land Use Department if you have any questions about the Task Force’s report and recommendations or an existing or planned conversion project.