A near-collapse looms over the office-to-apt boom
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An increasingly popular way to ease the housing crisis just developed some cracks. Some financiers are rethinking their involvement in office-to-apartment conversions after the largest US project of this kind risked partial collapse earlier this week, the Wall Street Journal reported.
Officials stabilized the former Pfizer headquarters that gave midtown Manhattan a major scare, but enthusiasm for future conversion projects could be on shakier ground. The WSJ spoke with infrastructure- and real estate experts, who now expect to see:
- More expensive builders’ insurance and stricter regulatory reviews, which could cause monthslong project delays.
- Softer appetites for complex office conversions. With the lead developer planning to add floors, a rooftop pool, and other expansions to the Pfizer building, its steel beams buckled under the added weight from the widening of ~15 upper levels, the developer told the WSJ.
That being said…one of the project’s main lenders is still “very bullish” on office-to-residential conversions, he told the WSJ. Similarly, others consider the near-collapse to be a mere anomaly that won’t foil future conversion plans.
Zoom out: The US started this year with ~90,000 new units in progress from office-to-apartment conversions—a 28% increase from last year, according to RentCafe. New York City commands the biggest share of that pipeline.
