Office buildings in New York continue to perform well, but the city faces an urgent need for more housing. This shortage is fueling a rise in office-to-residential conversions across the area. In response, Mayor Eric Adams and Governor Kathy Hochul have announced that the Empire State Development (ESD) Board of Directors has approved another major redevelopment—this time at 5 Times Square.
The project will transform the 38-story skyscraper into 1,250 new homes, with up to 313 units permanently designated as affordable housing, according to a statement from Governor Hochul’s office. The plan includes 1,050 studio apartments and 200 one-bedroom units. All residents will have equal access to the building’s amenities, though specific details about those amenities have not yet been disclosed.
The project will also repurpose one million square feet of office space and keep over 37,000 square feet of retail space.
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While overall office demand has even exceeded pre-pandemic levels in NYC — not all properties are created equal. Currently, 5 Times Square has a high 77 percent vacancy rate. That's well above the 17.3 percent availability rate in all of Manhattan in the first quarter, according to a report from Avison Young.
The move is a part of Adams' plan to build 100,000 homes in Manhattan alone over the next 10 years. Also, part of Hochul's budget includes $1 billion to support the City of Yes for Housing Opportunity, which amends the city's zoning code to loosen restrictions on residential developments. This is expected to create 18,000 new homes through conversion across 120 million square feet. Also, Adams' budget for fiscal year 2026 includes other housing initiatives: a $24.7 billion 10-year capital investment strategy that would preserve existing homes, build new ones and support repairs.
One of the biggest office-to-resi conversions in the city is the project at 219 and 235 East 42nd Street in Midtown East, which served as the former headquarters of Pfizer. Joint venture partners, Metro Loft Management and David Werner Real Estate Investments are looking to turn the vacant site into 1,602 luxury apartments, with 25 percent getting set aside for affordable housing. The transformation is expected to be delivered in the fourth quarter of 2027.
Since last April, 10,000 office-to-residential conversions have either been completed or remain under construction in NYC.
"Today, our city is facing an unprecedented housing crisis, and we must do everything we can to increase the overall housing supply and that includes where appropriate converting office space to residential," New York Congressman Jerry Nadler, who serves the state's 12th district, said in a statement.
"The transformation of 5 Times Square, into residential housing is one such conversion that will be a model for how we can create new housing in older outdated office buildings that has access to public transit."
Construction on 5 Times Square is expected to begin in the third quarter this year, with the first phase of the transformation expected to finish in 2027.
According to a report from Bisnow, RXR, SL Green Realty, and Apollo Global Management are the project's developers.
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