NYC Rezones Midtown Area Paving the Way for Housing Units by Stephanie Hazell

NYC Rezones Midtown Area Paving the Way for Housing Units

by Stephanie Hazell

New York Mayor Eric Adams recently announced plans to rezone a Midtown area permitting office buildings to be converted to housing units.i The rezoning plan paves the way for transforming “office buildings to housing ”and“ open[s] manufacturing areas south of Time Square to new residential development.”ii These changes are“part of a broader push to reinvent the struggling business district in Midtown Manhattan and address the city’s housing crisis.”iii

The Midtown South Mixed-Use Plan (MSMX) proposes twenty-four seven mixed-use neighborhoods that span across Manhattan’s Midtown South.iv The plan allows for additional housing development through rezoning areas between Twenty-Third Street and Fortieth Street and from Fifth Avenue to Eighth Avenue.v Residential building, which will include affordable housing, will be permitted in multiple areas that were previously zoned only for manufacturing under the current zoning rules.vi

The rezoning plan specifically allows buildings built before 1990 to take advantage ofthese conversion rights, whereas the prior cutoff only allowed conversions on building built before 1961 or 1977, depending on the location.vii The City estimates that these zoning changes could create 20,000 new residential units.viii It also allows office to housing conversions anywhere in the City where residential construction is permitted.ix

These zoning changescome at acritical time for New York City given the rental unit supply crisis. Rising interest rates have impacted potential home buyers rendering them renters for the foreseeable future. Lack of inventory, coupled with climbing demand, has resulted in rental prices reaching record highs.“The median asking rent on new leases in Manhattan is about $4,400 now...after rents rebounded from their low point during the pandemic.”x

Office conversions in New York City provide an attractive solution because commercial office building vacancy rates have climbed precipitously post-pandemic. As companies embrace the hybrid work environment, they continue to adjust their square footage downward increasing available office building space and increasing vacancy rates.xi

Although the public has commended New York City officials for coming up with this intuitive idea, City officials caution that State approval is still necessary to permit office to residential conversions of this magnitude.xii The City advised that it will be creating “a multiagency group to help developers cut through red tape” and a team to support owners.xiii Although the City’s plans suggest development of a team to assist building owners by analyzing feasibility and securing necessary permits the issue of funding is still in question.xiv

Funding is a top priority in building conversions and rezoning concepts but City officials have yet to work out any financial incentives.xv It is unclear whether without incentives, such as tax breaks or subsidies, building owners or developers will be interested in conversion.xvi Another unsolved issue is what regulations the new buildings will have to follow to qualify for section 8 or low income housing and how those regulations may create drawbacks to developer interest.

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i Zaveri, Mihir. “New York Plans to Convert Parts of Midtown Manhattan to Housing. ”The New York Times, The New York Times, 17 Aug. 2023, www.nytimes.com/2023/08/17/nyregion/eric-adams-midtown-rezoning-housing.html.

ii Zaveri, Mihir. “New York Plans to Convert Parts of Midtown Manhattan to Housing. ”The New York Times, The New York Times, 17 Aug. 2023, www.nytimes.com/2023/08/17/nyregion/eric-adams-midtown-rezoning-housing.html.

iii Zaveri, Mihir. “New York Plans to Convert Parts of Midtown Manhattan to Housing. ”The New York Times, The New York Times, 17 Aug. 2023, www.nytimes.com/2023/08/17/nyregion/eric-adams-midtown-rezoning-housing.html.

iv “Midtown South Mixed-Use Plan. ”Midtown South Mixed-Use Plan-DCP, NYC. gov, www.nyc.gov/site/planning/plans/midtown-south-mixed-use/midtown-south-mixed-use-overview.page Accessed3 Nov. 2023.