How to use all that vacant space

Even after the COVID-19 vaccine rolls out, New York City will face its deepest crisis in living memory. The pandemic not only killed and sickened tens of thousands of New Yorkers; it disrupted the twin engines of its economic growth: Manhattan office development and international tourism.

But the rise of work-from-home and collapse of travel, at least for now, doesn’t necessarily have to kill New York City. Our political leaders, real estate interests and housing activists can join forces and turn unused offices into desperately needed housing. Transforming vacant workspaces into housing could arrest the city’s decline and put New York on a path to a prosperous and more equitable future.

New York’s leaders should pivot away from a decades-long economic strategy of making New York — including the Manhattan core — a place where people have to work, to making it a place where people genuinely, truly want to live.

For half a century, the city’s establishment developed the skinny island into America’s central business district and premier tourist attraction, the place where the world came to do deals, shop, visit landmarks and be entertained. The strategy worked almost too well: The city didn’t really need to bother enticing middle and working-class people to come here or stay once they started families.

After all, corporate rents, tourist dollars and billionaires’ patronage kept the city rich, while demanding little of government services. If working-class, middle class or “merely” rich residents left because the cost of living was too high and services poor, who cared? They didn’t really pay the city’s bills. Meantime, the creative types who made this city so exciting would keep coming no matter how expensive it got, because no other city in the country provided them with the same opportunities to get noticed.

COVID-19 has broken that development model. No matter what incentives landlords, the city and the state offer firms, they can’t beat going virtual and eliminating office rents altogether. Even if office demand pulls out of its nosedive, as many in the real estate industry predict, few deny remote work is here to stay, likely limiting the recovery of this sector.

If the city and state forgo tax revenue in a hopeless bid to bring all these office tenants back, services and quality of life will deteriorate, driving residents away. As New Yorkers leave, more local businesses will fail. After retailers, restaurants, theaters and music venues go under, it will be harder to attract tourists when travel is safe again. The city’s political power will decline along with population — indeed, the city is likely to lose two Congressional seats in the next redistricting

New York can avoid this vicious cycle and tap pent-up post COVID demand if it preserves its unique non-office assets. It is the national capital of culture, fashion and media, with unparalleled amenities and global connections. The city needs people here to patronize those businesses and keep that culture vibrant.

Converting Manhattan offices to residences en masse will lower housing costs, making it easier to retain population. If more people move to Manhattan, they can patronize the restaurants and retail businesses that had catered to commuters and tourists, so the city will still have lots to offer in a potential post-COVID tourism and retail boom.

Cheaper housing will also help the city’s struggling service workers and artistic class, and they will be crucial to the city’s economy when it’s possible to enjoy nightlife and theater, both huge tourist draws. Retaining population will also arrest the MTA’s ridership death spiral, and stop the loss of political representation.

To be sure, this would not be free or easy.

One estimate put the cost of office-to-residential conversion at about $76 per interior square foot, plus an additional $17.50 for every exterior square foot. The largest open-plan modern buildings would be more difficult to convert; there’s no way to get natural light to the center of the floor.

But there are creative opportunities here: central parts of floors could house communal uses like gyms or daycares. And conversion is far cheaper than building entirely new apartments, which costs approximately $350 per square foot. Certain parts of Midtown, like the area around Penn Station, Herald Square and the Empire State Building, are full of smaller, older non-residential buildings that would be especially ripe for conversion, especially if the city does away with onerous zoning like commercial use distinctions and minimum parking requirements.

To put it another way: New York can bounce back after COVID if its leaders recognize that the city’s comparative advantage will be New Yorkers themselves. The more New Yorkers there are, the stronger New York will be. Cheaper, more abundant housing in the region’s core should be the cornerstone of a strategy for restoring the city and region’s long term economic health.