NEW YORK – Sept. 7, 2025 – New York City is experiencing a wave of office-to-residential conversions, marking the most active period since 2008, according to a new report from Cushman & Wakefield. Long discussed as a solution to the city’s dual challenges of high office vacancy and limited housing supply, residential reuse has now taken center stage as more projects move from proposal to execution.
According to the report, office to residential conversion starts, which totaled just 1.6 million square feet (msf) in 2023, more than doubled to 3.3 msf in 2024. Already in 2025, 4.1 msf of conversions have commenced through August—surpassing the entirety of last year in just eight months. Looking ahead, an additional 8.8 msf of projects are currently proposed for post-2025, underscoring the durability of this trend.
“Residential conversions have shifted from a talking point to a market reality,” said Reed Hatcher, Senior Manager of New York City Research for Cushman & Wakwfield. “We’re seeing record-setting activity in 2025, fueled by a combination of elevated vacancy, attractive economics, and supportive policies that remove some of the barriers to entry that developers previously faced. Conversions are not just repositioning obsolete office stock—they are helping address New York City’s critical housing shortage and reshaping the future of our built environment.”
This surge in conversions is the product of three key factors:
- Vacancy: Manhattan office vacancy remains elevated at 22.3% as of August 2025, more than double the pre-pandemic five-year quarterly average of 9.4%. Owners are increasingly motivated to reposition underperforming assets.
- Economics: Office investment values have reset significantly since the pandemic, making residential reuse a financially viable higher and better use for many obsolete properties.
- Policy: Initiatives such as the Office Conversion Accelerator Program (2023), the 467-m tax incentive (2024), the City of Yes zoning reforms, and the 2025 lifting of the FAR cap have collectively expanded eligibility and reduced barriers, paving the way for more projects to move forward.
The latest pipeline signals that conversions will continue to play a central role in the city’s real estate recalibration, balancing supply-demand dynamics while expanding the much-needed housing stock for New Yorkers.
You can access the full report here.