A Good Residential Conversion Can Be Hard to Find

While there is a lot of recent talk about converting hotels and offices to residential uses, John Cetra, cofounder at New York-based architecture firm CetraRuddy. says New York City has been at the forefront of residential conversions for almost 50 years, after passing regulations that make the process easier.

When Cetra started New York-based architecture firm CetraRuddy thirty years ago, he says there were many more buildings available for conversions.

“Most of them were in the financial district and were not fully occupied at that time for different economic reasons,” Cetra says. “People were leaving the city for different reasons. So there were a lot of office buildings built from 1910 to the 1930s that no longer met the needs of the modern, contemporary office environment [at the time].”

Cetra says many of those buildings had higher floor-to-ceiling heights with more open space and large windows. “You could have some fun in developing much more unique plans and ways to use these larger loft spaces,” he says.

However the lessons he learned all those decades ago may not apply in this next wave of conversions. Indeed, he says, there will be outright challenges in the most popular use case of converting outdated offices to residential properties. 

“An office building could have 12 or maybe even 15 elevators,” Cetra says. “In a residential building, you’d probably only need three or four. You don’t need that many elevators. If the elevator banks are significantly reduced, that opens up more space.”

It is true that large office buildings can provide a basis for super-sized residential units. Cetra has designed ones as big as 2,500 to 3,000 square feet. But, the market currently isn’t as interested in those units.

“Right now, there is not a lot of demand for very large units,” Cetra says. “That demand started diminishing in the middle of 2019.”

Part of the problem is that most rentals in New York lease between $75 to $90 per square foot. “If the unit is too big, it’s just impossible to rent,” Cetra says.

When converting commercial buildings into apartments or condos, it’s harder to reduce the square footage and keep the layout. In New York City, a bedroom has to have a window, for instance. Centra says some other states, like New Jersey, allow the second bedroom to be an interior space long as there is proper ventilation.

“It’s possible [to keep the layout], but you have to be very creative with how to organize the space,” Cetra says. “

Though they may be more difficult, such conversions are not only doable but can also generate significant demand, as Cetra found out on a conversion to a rental building in New Jersey. “Everybody loves them because you get these home offices and deeper spaces and higher windows and higher floors,” he says.