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Tackling housing crisis, New York City moving forward with Office Conversion Accelerator program

Tackling housing crisis, NYC moving forward with Office Conversion Accelerator program
Tackling housing crisis, NYC moving forward with Office Conversion Accelerator program 04:24

NEW YORK -- New York City is known as the business capital of the world. But ever since the pandemic, office buildings have been sitting empty across the five boroughs.

City Hall is hoping to turn this problem into a solution for the current housing crisis.

CBS New York got an exclusive look at one of the first buildings converting to residential housing, and has learned more on how this may change the landscape of the Big Apple.

Twenty-eight stories above Water Street in Manhattan's Financial District will soon be a lounge for the new residents of Pearl House. The 50-year-old building was once full of bustling offices. However, the pandemic emptied its halls and dried up its rental business.

"If it wasn't being converted to apartments, what would be happening to this floor? Would it just be sitting empty?" CBS New York's Ali Bauman asked Joey Chilelli, managing director of the Vanbarton Group.

"Completely empty, yeah," Chilelli said.

READ MORENew York City making it easier to live in affordable housing in the neighborhood of your choice

The building is one of 52 enrolled in City Hall's Office Conversion Accelerator program, which launched last year. It's meant to help landlords navigate the patchwork of regulations around renovating commercial buildings, and incentivize them to convert empty office space into housing.

"We're excited about the potential to solve multiple challenges that the city faces at the same time, challenges of outdated office stock, vacancy of office buildings, and our housing crisis," Deputy Mayor Maria Torres-Springer said.

Torres-Springer estimates there are 135 million square feet of vacant or dilapidated office space throughout the city that she believes can be converted into 20,000 new housing units.

"And by doing that, we're not just breathing new life into buildings like this. We're also reactivating business districts and providing more homes for New Yorkers, which is always critical but is particularly critical now when we're facing a decades-long housing crisis," Torres-Springer said.

READ MOREMayor Eric Adams touts affordable housing successes, calls for more state tax incentives

A recent U.S. census survey found the vacancy rate for rental apartments in New York City is 1.4%, its lowest level since 1968.

And that drops even more for apartments priced less than $2,400 a month -- a vacancy rate of less than 1%.

"Building the housing, yeah, we need the housing, but building the housing and making sure the rent is affordable is a separate thing," said John Montoute, director of the Tenants Rights Coalition with Bronx Legal Services. "If the minimum income requirements are larger than the median income of the neighborhood, who is it affordable for?"

CBS New York toured some of the finished apartments in Pearl House. One studio rents for $3,500 per month.

"This is a gorgeous building, but does it solve the problem of affordable housing? Because the person struggling with rent isn't necessarily moving into this beautiful building," Bauman asked.

"Here's the reality: this city has a major supply problem in terms of housing. We need housing for all income levels. If you look at the last decade, we've added 800,000 jobs but only 200,000 homes. So I think the research is unambiguous. More homes will equal more affordability, so we have to increase the supply across all types of housing across all income levels," Torres-Springer said.

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The Big Apple is following the lead of the Mini Apple. Minneapolis added 12% to its housing stock over the last five years. Rent in the city increased by 1%, compared to a 14% rent hike in the rest of Minnesota, according to Pew Charitable Trusts.

"By comparison, New York City consistently adds well under 1% to its housing stock. So Minneapolis is more than tripling the rate of housing production as New York City, and what has happened is rents have not budged," said Alex Horowitz, director of the Housing Policy Initiative for Pew Charitable Trusts.

In the same five years, homelessness in Minneapolis also dropped 12%.

"Increasing the supply of housing has undoubtedly helped the city," Minneapolis Mayor Jacob Frey said.

Frey attributes some of the city's success to changing its zoning laws.

"It has helped us create more sustainable housing for people who need it. It has helped us to provide deeply affordable housing and it has added to our tax base," Frey said.

Back in New York City, Torres-Springer is urging the City Council to also approve a package of zoning changes, such as eliminating parking mandates.

"It essentially makes it easier to get rid of what are onerous regulations in our zoning code that make it difficult for building like this to convert," Torres-Springer said.

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The deputy mayor said the last piece of the puzzle to make the program work will be convincing the state Legislature to pass Gov. Kathy Hochul's bill that would give landlords a tax break for including affordable units in their office-to-housing conversions. So that studios, like the one CBS New York saw, can be accessible to lower-income New Yorkers, and what's happening at Pearl House can be copied in offices from Jay Street to Fifth Avenue.

"I think one of the great advantages, competitive advantages, of New York City is we're generally more mixed use," Torres-Springer said. "Our superpower is we have the ability with commerce, culture, food, to be active all year round, 24 hours a day, and I think we need to latch on to that identity and superpower so we not only crawl out of the pandemic but we actually thrive in its wake."

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