Hundreds of New Affordable Units May Come to Lower Manhattan, But Are They Enough
The torrent of conversions by which obsolete office space in Lower Manhattan is repurposed as new residential units continues unabated, according to the Downtown Alliance’s quarterly analysis of Lower Manhattan real estate trends, covering the period of April through June of this year. This report cites newly announced projects at 80 Pine Street (500 units) and 64 Fulton Street (89 units), as well as ongoing conversions at 111 Wall Street (1,300 units), 222 Broadway (798 units), and Two Wall Street (121 units). Announcements in the third quarter of this year include 40 Exchange Place (382 units), 88 Reade Street (19 units), and 139 Franklin Street (a self-storage to residential conversion, with 18 units).
Elsewhere in Lower Manhattan, developer David Warner (who has amassed a track record of buying distressed office properties at a steep discount, and then converting them into apartments) has purchased 100 Wall Street and Five Hanover Square, both of which appear poised to be transformed into residences. In each case, Mr. Warner paid less than half of what these buildings traded for in the last decade.
In a separate but related development, a July analysis from City Comptroller Brad Lander found that Lower Manhattan is not only the site of more office-to-residential conversions than any other district in the five boroughs, but more than all the others combined. Mr. Lander’s report, “Office-to-Residential Conversions in NYC: Economics and Fiscal Estimates,” notes that since 2020, the City as a whole has seen the conversion of 13.5 million square feet of obsolete office space into 16,510 units of housing, of which 9,297 units (or 7.8 million square feet) have been in the area south of Canal Street (primarily the Financial District). This translates into approximately 56 percent of all such conversions in New York taking place in the square mile at the southern tip of Manhattan.
In a third development that relates to the conversion of office buildings to residential use, the “NYC Housing Tracker Report 2025,” a new study from the New York Housing Conference (NYHC), a nonprofit affordable housing policy and advocacy organization, finds that City Council District 1 (Lower Manhattan) produced 341 new units of affordable housing last year. This total – which comes after the NYHC’s report for the prior year found that District 1 was tied for dead last in terms of affordable housing creation anywhere in the City – appears to be almost entirely attributable to a single project: the conversion of the former office building at 25 Water Street into 1,320 apartments. Of these, one quarter (or 330 apartments) are set aside as affordable, under the terms of the City’s 467-m program, also known as the Affordable Housing from Commercial Conversions Tax Incentive Benefits.
If all the office-conversion projects outlined above participate in the 467-m program, this could bring more than 750 new units of affordable housing to Lower Manhattan in the near future. But some critics argue that the scheme doesn’t deliver enough benefits to the public. Mr. Lander, for example, notes in his report, “post-pandemic conversion activity already appears on track to exceed the totals subsidized… in the Financial District in the 1990’s and 2000’s,” but that the 467-m program is “likely too generous in Lower Manhattan.”
In a parallel analysis, the Association for Neighborhood and Housing Development (ANHD), an organization of 100 non-profit affordable housing and economic development groups in New York City, noted in the 2025 edition of its annual roundup, “How Is Affordable Housing Threatened In Your Neighborhood?” that Lower Manhattan is among the most imperiled communities when measured by the number of Low Income Housing Tax Credit (LIHTC) units that will expire in the next four years.
LIHTC is a federal program that confers income-tax credits upon housing developers in exchange for a subset of the units they create to be set aside as rent-restricted apartments for lower-income households. By law, LIHTC benefits expire after 30 years. At that point, the owners of such properties have three options: to apply for a new round of tax credits while maintaining affordability protections, to continue operating the property as affordable housing without new subsidies, or to opt out of the program and reposition the former LIHTC property as market-rate housing. Historically, the first of these options is common in areas where rents are flat or declining, the second is nearly unheard of, and the third is most prevalent in communities where rents are trending upward, such as Lower Manhattan. ANHD’s report says 945 such units will lapse out of LIHTC protections within Community District 1 over the next 48 months. This total will absorb the entirety of the 750 units created by office-to-residential conversions receiving 467-m tax subsidies.