The city’s mega-office landlords are panicking, pivoting, and shedding what’s worthless.One opens his books.

By Andrew Rice @ Curbed.com, July 17

[....] The distress of the office market creates a rare opportunity to create the one real-estate commodity everyone agrees the city needs: housing. The civic logic is compelling. “New York City is facing an existential crisis,” Rechler said [....]

[...] The conversion proposition is appealing to policy-makers, including the mayor and the governor. Last year, their “New” New York Panel recommended revising building regulations and zoning to make it easier to turn offices into apartments. “That was the most low-hanging of low-hanging fruit,” says Andrew Kimball, the head of the city’s Economic Development Corporation. “That did not happen.” Governor Hochul incorporated the panel’s recommendations into her housing plan, which died in the State Assembly partly because some Democrats wanted concessions on eviction laws that were radioactive to the real-estate industry.

Some progressives have argued that conversion programs should mandate the inclusion of affordable housing. But Van Nieuwerburgh says that is impossible without large government subsidies. Even setting numbers aside, he estimates that only around 30 percent of Manhattan buildings have “hope for convertibility.” The huge buildings with column-free trading floors for financial firms, which were so lucrative to build in the 1980s and ’90s, are now extremely complicated to convert into apartments because they have so much interior space without windows. If a landlord has office tenants, time-consuming negotiations with holdouts may be required. (At the Real Deal event in June, Blau, the Related CEO, estimated that 30 percent of tenants “will never fucking leave.”)

Even when a building does pencil out on paper, every step in the process is a challenge. One sunny day in May, I walked over to the Centre Street courthouse to watch the auction of the landmarked and vacant Flatiron Building.[....]