cities counting on sweeping plans to quickly turn halfempty office buildings into new homes might want to listen to nathan berman the longtime goto guy for residential conversion projects in lower manhattan berman made his mark on new york city’s financial district before and after 911 with metro loft his property development firm known for transforming outdated buildings in the fabled business district into places people want to live “the biggest thing that nobody seems to understand is that these aren’t vacant buildings” berman said in a phone interview “unless you are prepared to do conversions that are done in phases nothing is happening immediately regardless of how much money you throw at it” that isn’t berman suggesting badly needed homes in big cities won’t get built out of antiquated offices he’s convinced they will but berman and others with a track record of getting complex office conversions off the ground and built– insist the task is less of a nipandtuck than an urban facelift for the ages “this is going to take decades” said antonia botero principal at maddproject a national forfee development and consulting firm in utah “we are not going to figure this out in the next 10 years” while the pandemic left many older office properties only sparsely populated berman said nearly all lower manhattan properties that might be considered candidates for new york city’s redevelopment plan still have office tenants with longterm leases in place sometimes with 3 4 or more years left “there are very few buildings of that scale that are vacant almost none” berman said of downtown new york city offices “nobody is going to undertake vacating buildings of that scale” he said adding that even one holdout tenant can create headaches for a developer and make the economics of a project very difficult “when tenants know you can do it in phases and build around them it takes away their ability to stop you or hijack the project” he said “that’s going to be the future of conversions” botero who previously worked with berman on several post911 conversion projects in lower manhattan said it took nearly 30 years of history to create the conditions for new york city’s financial district to be ripe for revitalization officetoresidential conversions also need bankable developers with a highly specialized set of skills manhattan conversion projects for example can be billiondollar projects that include navigating historical buildings with lead and asbestos often built near subway lines construction often involves coordinating with con edison new york’s transit authority the fire department and more “you need developers who are going to execute and we just don’t have that many of them” she said “it’s like asking a heart surgeon to perform surgery while riding a unicycle” new york city unfurled plans in january to turn obsolete office buildings in midtown and lower manhattan into as many as 20000 new homes in the next decade with a clear focus on creating affordable units conversion projects that start with vacant buildings take 18 to 24 months to complete according to berman while transforming buildings in phases with some paying tenants in place can take much longer often three to five years “we think there is tremendous potential here” said maria torresspringer new york city deputy mayor for economic and workforce development in a latemarch webinar on office conversions in new york city and beyond “that’s tens of thousands of new yorkers who would have access to more homes if we facilitated this type of conversion” new york like other major cities pushing to create living spaces out of offices want to ease the path of development by changing local legislation but also by offering incentives to keep affordable housing in the mix chicago in late march accepted three proposals by developers to help transform its lasalle street corridor in the city’s historic financial district into a residential and retail destination researchers see potential in san francisco’s reeling financial district by turning a near 30 office vacancy rate into 11000 new housing units in new york torresspringer said the mayor’s office has identified about 100 rules and regulations that could be eased to speed along development of note new york state let a lucrative taxbreak program known as 421a expire last year for developers which had been a cornerstone of affordable housing developments in new york city for 50 years “why not extend the only program that ever delivered” said berman who with recent projects like 20 broad street a luxury residential overhaul of the former headquarters of the new york stock exchange didn’t rely on city or state incentive programs metro loft so far has focused on developing marketrate housing berman said the emphasis by cities to create affordable housing conversions in the wake of the pandemic adds another layer of complexity to development “it would be a wonderful option to have” he said “it will clearly help with certain projects but i don’t have a lot of confidence that politicians in albany and new york city will come together and do something that’s actually economically feasible or viable” how it could work stijn van nieuwerburgh a professor of real estate and finance at columbia university’s graduate school of business sees a “perfect storm” bearing down on older office buildings remote work tighter credit at banks and other factors like zeroemissions goals will cut values of some older office buildings by 70 he said on the flip side his calculations also show largescale conversions to residential properties almost pencil out if developers can snap up buildings at distressed prices “i can easily identify about 10 million square feet or about 10000 apartments that could be built in that space” van nieuwerburgh said during the march webinar on transforming old offices “but the question is are these conversion financially viable” his calculations suggest they aren’t yet not without tax abatements or federal government funding for that he pointed to potential funding through the us environmental protection agency under provisions of the inflation reduction act that under his reading could fit the bill and “subsidize some of this brownofficetogreenapartments” transformation botero at maddproject said that despite the heavylift of transforming urban landscapes she’s excited by the prospect of seeing major us cities with plans for the future plotting out their next chapters “we should make super aggressive plans” she said “i love that some european cities have 1520 year plans that they’ve been thinking about them for a long time i don’t think we should narrow ours to 10 years and in five years say it doesn’t work it’s not enough time” berman sees new york city’s fate as already sealed in terms of creating more housing “it’s not only feasible it’s going to happen anyway” he said “failing buildings will ultimately be cheap enough bricks will be cheap enough to make the economics work”