A study from CBRE suggests that office-to-residential conversions could “reshape” Manhattan for the better.
Such conversions have gained more popular attention in the last few years, especially as the office market has faced a bifurcation. With companies trying to bring workers back into the office and still a lot of hybrid work lowering overall need for office space, Class A and A+ buildings have seen plenty of demand with a flight to quality. Class B and C, which are 85% to 90% of the stock, are the spaces left at the altar.
Conversion is often mentioned as a possible way to use older buildings. CBRE notes that the move has significant potential in Manhattan and a multi-decade history. The first wave of conversions started in the 1990s and early 2000s across millions of square feet of pre-war office blocks in the Financial District. The reason was the climbing vacancy rates that resulted from corporate migrations to Midtown.
Recommended For You
This ongoing shift could integrate residential projects into parts of Manhattan that primarily rely on commercial uses. Adding residents would likely draw other types of uses, like entertainment and retail, to create more vibrant areas that could sustain greater demand and commerce.
The new era of conversions involves candidate buildings with a median age of 68. About 60% of the square footage is in Midtown, and 60% of the buildings were constructed after 1961. There is currently a pipeline of planned or underway conversions of six post-1961 buildings, comprising 10. There are also 14 non-downtown conversions.
That is out of 100 “most available” properties in the city. CBRE said that after removing buildings being renovated and repositioned and ones with floorplates too large to convert, 44 buildings are aging with high availability and meet the lowest technical threshold for full or partial conversion.
The Midtown area has 249.5 million square feet of office inventory and an availability rate of 16.3%. The 2023 residential population in the submarket was 216,000, with a population density of about 64,600 per square mile over the approximate 3.35 square mile area.
There’s a year-over-year Manhattan population growth of 2%, 3.5% job growth, and a 21% finance share of New York City office-using employment, with 68 million expected annual visitor count. However, international tensions between the U.S. and other countries could have a negative impact.
According to CBRE, conversion is happening at “an unprecedented rate” as developers acquire under-performing office properties in peripheral submarkets.
Manhattan continues to have many properties “that appear fated for obsolescence resulting from an unfavorable combination of vintage, location, and evolving occupier preferences.”
However, property owners face many challenges, so there is more likely to be a stream of conversions over time and not a sudden flood.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
