Office Glut has Cities Rethinking Single-Use Downtown

With record-high office vacancies persisting as the pandemic wanes in the US, a growing number of cities are adjusting single-use downtown zoning to encourage office conversions to multifamily and mixed-use developments.

Mixed-use neighborhoods generally fared better economically during pandemic shutdowns than single-use business districts. With much of the workforce now embracing work-where-you-live options, the days of office-only city districts that empty out at night may soon be numbered.

In Washington DC, the combination of a housing crunch and a record office vacancy rate of more than 18 percent has spurred a wave of recent office-to-apartment conversions. Absorption of Class A apartments in the Washington metro area was 16,310 in 2021, with vacancies at 3.4 percent at the end of the year, according to Delta Associates.

City officials are debating changes to single-use zoning codes in Washington that prevent office conversions in the Central Business District, where the average age of office buildings is 45 years.

Conversion of older office buildings to apartments and mixed-use developments also is the focus of efforts to change zoning codes in Manhattan.

A Real Estate Board of New York (REBNY) study released in December found that 10 percent of Midtown Manhattan’s older office space could be converted to residential use, generating 14,000 new apartments.

The REBNY study said NYC neighborhoods targeted for conversion of older office buildings include the Garment and Flatiron Districts and Midtown East. The study estimates that Class B and Class 6 office space totals more than 160 million SF, about a quarter of the total in Manhattan.

Asked about the post-pandemic future of Midtown in a recent newspaper interview, Mayor Eric Adams cited the rezoning of Lower Manhattan after the 9/11 terrorist attacks to permit the development of new residential neighborhoods.

“Everything is on the table,” Adams told The City. “We changed the zoning and changed the ways we could do housing in office space and I think we should be open to do so [in Midtown].”

Many of the buildings targeted for conversion in Midtown Manhattan were built in the 1960s, in towers with most of the square footage configured on large floor plates deep inside windowless building cores, making them harder to convert to residential use.

NY Gov. Kathy Hochul has proposed a revision to the state’s multiple dwelling law to allow more flexibility on floor area, light and air requirements for office buildings south of 60th Street in Manhattan.