Empty office buildings in Midtown region potentially capable of accommodating over 78,000 apartments, according to a new report.
In the heart of New York City, where housing availability is at an all-time low and rents are soaring, a new report has shed light on a promising solution. The Kaplan Group's recent study suggests that Midtown Manhattan has the highest potential of any U.S. city to convert empty office buildings into over 78,000 residential units [1].
The study, based on data from Cushman & Wakefield's first-quarter 2025 office market report, evaluated cities based on year-over-year vacancy rate changes, total vacancy, and overall conversion potential [2]. San Francisco ranked second with 61,603 units, followed by Dallas, Houston, and Chicago in the top five.
Key efforts in Midtown Manhattan include a first wave of conversions after the pandemic, anticipating about 17,400 new apartments from 44 office-to-residential conversion projects across NYC’s central business district south of 59th Street [2]. Notable projects are transforming major former office headquarters such as Pfizer’s Midtown East HQ into 1,500 apartments and 25 Water Street into 1,300 apartments [2].
Silverstein Properties and Metro Loft have announced plans for over 2,000 new apartments through office-to-residential conversions focused on Hell's Kitchen, adjacent to Midtown. This plan includes more than 500 permanently affordable units and builds on their prior successful conversion of 55 Broad Street into 571 apartments [4].
These conversions are seen as a critical strategy amid record-low housing availability and soaring rents in NYC, but investor enthusiasm faces uncertainty due to proposed rent regulations such as a potential rent freeze affecting rent-stabilized units required by current tax incentives [3].
The study suggests that converting unused offices into apartments could help stabilize rents, revitalize downtown corridors, and make cities more responsive to shifting work and population trends. It also recommends more rigorous tenant screening and debt management strategies as more units, both converted and new, enter the market [5].
However, the report warns of financial risks for property owners, such as increased reliance on debt collection agencies, added costs, delays, and legal challenges due to vacancies and tenants falling behind on rent [5]. With vacancy rates at a 50-year low in New York City, the idea of transforming unused commercial real estate into housing is gaining momentum among urban planners and policymakers.
The report offers a data-driven perspective on how cities might rethink their built environments to meet changing economic and demographic realities amid a national housing supply and demand mismatch. Over the past year, nearly three-quarters of cities surveyed saw an increase in vacancy rates, highlighting the impact of hybrid work on commercial real estate demand [6].
Sources:
[1] The Kaplan Group. (2025). Midtown Manhattan Office-to-Apartment Conversion Potential. Retrieved from https://www.kaplangroup.com/reports/midtown-manhattan-office-to-apartment-conversion-potential
[2] New York YIMBY. (2025). 44 Office-to-Residential Conversion Projects Planned for NYC's Central Business District. Retrieved from https://newyorkyimby.com/2025/03/44-office-to-residential-conversion-projects-planned-for-nycs-central-business-district.html
[3] The Real Deal. (2025). New York City's Office-to-Residential Conversion Boom Faces Uncertainty. Retrieved from https://therealdeal.com/2025/03/23/new-york-citys-office-to-residential-conversion-boom-faces-uncertainty/
[4] Silverstein Properties. (2025). Silverstein Properties and Metro Loft Announce Plans for Over 2,000 New Apartments in Hell's Kitchen. Retrieved from https://www.silversteinproperties.com/news/silverstein-properties-and-metro-loft-announce-plans-for-over-2000-new-apartments-in-hells-kitchen
[5] The Kaplan Group. (2025). Financial Risks for Property Owners in Office-to-Apartment Conversions. Retrieved from https://www.kaplangroup.com/reports/financial-risks-for-property-owners-in-office-to-apartment-conversions
[6] Cushman & Wakefield. (2025). Office Vacancies Rising Nationwide. Retrieved from https://www.cushmanwakefield.com/en/research/office-vacancies-rising-nationwide
- The promising solution for New York City's housing crisis, as highlighted in a recent report by The Kaplan Group, involves converting empty office buildings into residential units, with an estimated potential of 78,000 units in Midtown Manhattan alone.
- The decision to convert commercial real estate into housing is gaining momentum among urban planners and policymakers, given the record-low housing availability and soaring rents in cities like New York.
- The Kaplan Group's study, based on data from Cushman & Wakefield, evaluated cities based on factors like year-over-year vacancy rate changes, total vacancy, and overall conversion potential. San Francisco ranked second, while cities like Dallas, Houston, and Chicago also made the top five.
- These office-to-residential conversions face uncertainty due to proposed rent regulations, as investors weigh the potential for increased reliance on debt collection agencies, added costs, delays, and legal challenges due to vacancies and tenants falling behind on rent.
