Written by Mihir Zaveri.
The 38-story building in the heart of Midtown Manhattan will be turned into 1,250 apartments.
A struggling office tower in the heart of Midtown Manhattan is set to be converted into a residential building with 1,250 apartments, in one of the most notable examples of how New York City’s economic center has evolved after the coronavirus pandemic.
The board that runs New York State’s economic development corporation voted unanimously on Thursday to approve the conversion of the 38-story building, 5 Times Square, which has been mostly empty since 2022.
The converted building will mostly have studio apartments and is likely to open to tenants in 2027, state officials said. One-quarter of the 1,250 units will be designated as “affordable,” which, according to the most recent figures, would rent for on average of roughly $2,174 a month. (The typical asking rent in April on a new lease for a one-bedroom Midtown apartment was at least $4,500, according to data from the real estate company StreetEasy.)
The vote on Thursday is another symbol of Midtown’s transformation and reflects how commercial areas and downtowns across the United States are continuing a rocky rebuild after the pandemic upended traditional work patterns. Many wondered if Midtown — and, as a result, New York City’s economy — would ever rebound.
But state and city officials are framing the vote as another example of a broader transformation. Nearby, the former headquarters of Pfizer are being turned into 1,600 apartments. A building in the financial district that once housed JPMorgan Chase, The National Enquirer and The New York Daily News is being converted into 1,320 apartments.
The state estimates that since April 2024, some 10,000 new apartments have been built or are under construction through conversions of former office buildings.
“This 5 Times Square Project perfectly fits into my objective of being creative and finding anywhere and everywhere we can to build housing,” Gov. Kathy Hochul said in an interview.
Office conversions, however, remain a relatively small part of the city’s response to the deepening housing crisis. Rents continue to climb, driven by a housing shortage that is at its worst point in nearly 60 years. Many housing experts think the city needs hundreds of thousands of more homes to make things more affordable.
In many cases, office conversions don’t work because they are too expensive or complicated. They often require significant public investment, either in the form of subsidies or tax breaks.
And it remains to be seen whether the conversions continue or the office market “stabilizes and comes back a little bit,” said Moses Gates, vice president for housing and neighborhood planning at the Regional Plan Association, a nonprofit civic organization, which supported the conversion.
“We’re still in a little bit of uncharted territory here,” he said.
Because the pandemic pushed many New Yorkers away from office work, Midtown has become something of a coveted target for city leaders, a rare opportunity to add housing density in a crowded place like Manhattan.
Ms. Hochul noted that she had an apartment in Midtown that she uses when she’s in the city, “because my office is around the corner and I want to walk to work every day.”
Mayor Eric Adams is pushing a plan that would change the zoning for 42 blocks of the neighborhood and allow for some 9,700 additional homes. He has said he wants 100,000 additional homes built in Manhattan over the next decade.
The 5 Times Square project is one of the largest to be supported by new housing measures passed by the state in 2024, including a new tax incentive designed to bolster these types of conversions and a law that removed restrictions on density in Manhattan.
The tower, which sits between 41st and 42nd Streets along 7th Avenue, was built between 1999 and 2002. It was “intended to be a commercial keystone in Times Square,” according to state documents. The lot itself is owned by the city and is within a 13-acre swath of Midtown that was targeted for revitalization in the 1980s.
But the building has been mostly empty since its main tenant, the auditing firm EY, moved its U.S. headquarters in 2022 to a newer Manhattan development on the West Side. Today, it is nearly 80 percent vacant, according to state officials.
The city leases the land to a development team led by RXR, a real estate firm.
Conversions like this one wouldn’t be possible without a tax break, Ms. Hochul said. The developers will get a 90 percent exemption on property taxes for the first 30 years after the building is finished.
Scott Rechler, the chairman and chief executive of RXR, said in a statement on Thursday that the conversion showed “how forward-thinking policies can strengthen and reimagine neighborhoods such as Times Square.”
In addition to the apartments, the repurposed building will also have some office space and roughly 37,000 square feet of retail space. The construction itself involves expanding plumbing and electrical systems, adding bathrooms and kitchens and dividing open spaces into individual units.
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