CITY OF YES
THE CITY THAT NEVER SLEEPS HAS A WAKE-UP CALL: NYC EMBRACES THE “CITY OF YES” ORDINANCE
THE “CITY OF YES” IS A MAYORAL INITIATIVE LAUNCHED BY NEW YORK CITY MAYOR AND TASK FORCE TO MODERNIZE NEW YORK CITY’S ZONING REGULATIONS. IT IS AN INITIATIVE WHOSE PROVISIONS WERE ADOPTED BY THE NEW YORK CITY ZONING ORDINANCE IN EARLY DECEMBER 2025. ITS MAIN OBJECTIVE IS TO ADDRESS THE CRIPPLING HOUSING SHORTAGE AND THE RESULTING AFFORDABILITY BY ENABLING GREATER DENSITY.
ALONG WITH FACILITATING HOUSING DENSITY IT REMOVES RESTRICTIVE PARKING MANDATES, AND ALLOWS PROPERTY CONVERSIONS,
PARTICULARLY
OF BUILDINGS CONSTRUCTED
BEFORE 1990. WITH NEW YORK FACING AN ESTIMATED 300 MILLION SQUARE FEET OF VACANT OFFICE SPACE, UPDATING ZONING REGULATIONS TO FACILITATE ADAPTIVE REUSE COULD DRAMATICALLY INCREASE THE SUPPLY OF RESIDENTIAL UNITS, MAKING IT A KEY COMPONENT IN SOLVING THE HOUSING CRISIS.
Single-family homes can now utilize their lower levels for incomeproducing spaces, and new incentives like a 20 percent increase in Floor Area Ratio (FAR) are offered for affordable housing projects.
This initiative aims to construct approximately 100,000 new homes over the next decade, particularly near transit and commercial corridors. By revising zoning laws last updated in 1961, streamlining approval processes, and promoting adaptive reuse, the City of Yes will help address the city’s housing shortage. In a market with a rental vacancy rate of just 1.41%, it introduces tools like the Universal Affordability Preference (UAP) and deep affordability zoning incentives to ensure housing remains accessible to low-income residents.
New York City’s outdated zoning laws have become a barrier to growth, limiting the city’s ability
to adapt to modern needs. The City of Yes modernizes these regulations, unlocking opportunities for a more sustainable, livable, and resilient New York. “By repurposing vacant offices and underutilized buildings into housing,” says Alkis Klimathianos, residential principal for Perkins Eastman, “the city can quickly expand its residential capacity, reduce waste, and breathe new life into existing spaces.”
Perkins Eastman is at the forefront of the office-to-residential conversion conversation. We are actively driving research and leading efforts to assess, evaluate and convert underperforming commercial assets across North America. Our successful conversion projects in cities such as Chicago, New York, Washington DC, and Philadelphia demonstrate our expertise in transforming spaces to meet contemporary housing needs.
TURNING POLICY INTO PROGRESS
In New York City, converting buildings is not straightforward. Strict zoning regulations dictate where and when conversions can occur, with restrictions based on factors like the district and the age of the building. Until the adoption of the City of Yes provisions, the NYC Zoning Ordinance permitted buildings constructed before 1961, with specific allowances for some buildings in downtown areas up to 1977, to be converted. In fact, only about 20 percent of commercial buildings in Manhattan were eligible for conversion under the zoning
laws prior to the adoption of City of Yes, earlier this year. This limited opportunities to adapt/convert underutilized office space for residential use. The city’s policy is clear: conversions are permissible only if they comply with zoning requirements. Those that are permissible as “conversions” must meet the strict criteria set forth in the Zoning Ordinance. The existing buildings that meet the date requirements of the Zoning Ordinance and the NY State’s Multiple Dwelling Law have the benefit of more relaxed provisions offered for conversions to residential use. Those provisions allow for easing of light and air
ONLY ABOUT 20 PERCENT OF COMMERCIAL BUILDINGS IN MANHATTAN WERE ELIGIBLE FOR CONVERSION UNDER THE ZONING LAWS PRIOR TO THE ADOPTION OF CITY OF YES.
requirements, floor to area ratio requirements and allowable depth of units with interior rooms that can be used as home offices. Converting a building that does not meet the date requirements often mean significant modifications are needed to meet “as-of-right” residential standards, adding considerable expense to the process. This ultimately makes conversion projects financially unapproachable.
Certain areas in NYC have had special permissions and reviews that make them more suitable for conversions than others. For instance, as a response to the economic recession of the early 1990s, a time when office space vacancies had reached almost the same levels as post-pandemic levels, exceptional zoning provisions were enacted to align with the New York State’s Multiple Dwelling Law that have afforded the Financial District specific benefits when it comes to conversion of bulk massing, zoning areas and unit depth. As discussed earlier, developers can utilize an increased unit depth instead of the traditional residential unit depth of 30 feet, as specified by the building code. This increased depth can be leveraged for various uses, as outlined in the zoning text, in addition to minimizing the amount of floor plate and structural modification that would have been otherwise needed to make the building light and air compliant in an as-of-right manner.
EVALUATION FRAMEWORK
As cities evolve and the demand for diverse housing options grows, Substandard commercial space Class B and Class C office buildings have emerged as prime candidates for residential conversions. These properties, often characterized by their older architectural styles and established locations, offer unique advantages when it comes to transforming them into multifamily living spaces. These properties also present developers with lucrative underwriting and financing opportunities, as their values have fallen considerably, making them more attractive for investment, a substantial evaluation factor in today challenging capital markets environment
Perkins Eastman is an expert in Class B and Class C office building conversions in New York City and at evaluating assets to draw rapid conclusions about the initial suitability of transforming office buildings. We look at the following criteria to align with a developer’s pro-forma or business model for a project.
• Date of Construction: To assess conversion eligibility can compliance with conversion provisions in the both the NYC Zoning Ordinance and the New York State Multiple Dwelling Law
• Floor plate depths: Although the zoning code conversions provisions allow deeper units, there is a practical limit range that make the spaces desirable
• Conditions at adjoining lot lines: To evaluate possibilities and opportunities for light and air in the faces of the building that do not have street-line frontages. This can mandate some massing and bulk modification and minimizing that is critical.
• Core and egress components: To determine if their location and capacity is adequate, impacts to net area efficiency and to confirm code requirements and safety are met.
• Envelope and Facades: Residential units require natural ventilation through operable fenestration vents. Converting commercial spaces often means adding operable windows to an existing façade. Older office buildings tend to address this better as most were built with operable windows. The newer stock of office buildings which typically depend on mechanical ventilation require more extensive modification to accommodate operable windows.
• Structural Capacity: Some level of overbuild addition is often desired on a conversion project. Ensuring that the structural capacity is there to support it and that the amount of reinforcement is minimal is critical. Foundation work is to be avoided. Its cost is prohibitive.
CONSIDER
/LIMIT MODIFICATIONS WHILE OPTIMIZING PLANNING AND AREA
PLAN UNITS MAXIMIZING EFFICIENCY AND MARKET VALUE
Class B and Class C office buildings (especially those built in the pre-war era) present an exceptional opportunity for residential conversions. Their favorable floorplan depths, combined with the potential to minimize modifications and a tailored evaluation approach, position them as ideal candidates for transforming underutilized commercial spaces into vibrant multifamily housing. As cities continue to adapt to changing demographics and housing needs, these buildings will play a crucial role in meeting the demand for affordable and accessible residential options.
SMART GROWTH TAX INCENTIVE AND FINANCING OPPORTUNITIES
The recent replacement and extension of the 421-a tax abatement in New York City with 485X and 467M, implemented just a few months ago, aligns with the City of Yes for Housing Opportunity initiative by advancing the city’s efforts to promote affordable housing and drive sustainable development. These state tax incentives serve as crucial tools for developers seeking to create or convert residential properties, supporting the city’s broader zoning and policy reforms aimed at increasing housing supply, fostering mixed-income communities, and ensuring long-term economic vitality
In addition to 467M program, other tax abatement programs aim to incentivize property improvements and boost the city’s affordable housing stock. Specifically, the J-51 program offers tax relief for building upgrades, including those in rent-stabilized buildings, which could be eligible if their rent roll falls below a certain threshold. This program, designed to encourage building repairs and improvements, aligns with the City’s broader goal to address the housing crisis by facilitating adaptive reuse of existing structures, such as office-to-residential conversions. This also supports “City of Yes” projects that mostly include income restricted units by making renovations more financially feasible, contributing to the expansion of affordable housing options across the city.
Other national funding and financing opportunities, such as the Railroad Rehabilitation and Infrastructure Financing, provide funding opportunities for developments which are near transit infrastructure, whose owner/developer either commits to providing some improvement to the transit infrastructure or contributes to a fund aimed at national transit improvements.
Extended Tax Benefits
One of the standout features of the 467M, the program plan that establishes the Affordable Housing from Commercial Conversions Tax Incentive Benefits, is its duration, offering benefits that span between 25 to 35 years, depending on the year of commencement of the project, while requiring 25 percent of residential units be income restricted units. This extended time frame enables developers and owners to secure substantial savings on property taxes, creating a more favorable financial environment for new projects. By alleviating the immediate financial burden of property taxes, developers can allocate more resources towards construction, enhancing the quality and sustainability of their projects, while also creating much critically needed affordable residences.
Encouraging Affordable Housing
The tax abatement includes two key components: the 485X (Affordable Neighborhoods for New Yorkers Tax Incentive) program for ground-up construction and 467M (Affordable Housing from Commercial Conversions Tax Incentive Benefits) for conversions, which encourages developers to include 25-percent affordable housing units in their projects. This requirement not only incentivizes the creation of affordable housing but also ensures that these units remain accessible for generations to come. By mandating that affordability be maintained indefinitely, the tax abatement promotes a more inclusive housing landscape in a city known for its high living costs.
Creating Resilient Communities and LongLasting Stability
The continuation of tax incentives through 485X and 467M will enable development of both market rate and affordable housing in all areas of New York metropolitan area. In the case of 467M, the conversion development that it will help to spur will allow for once heavily commercial areas in the city to sustain their vitality by transforming into new and dynamic residential neighborhoods. This will inevitably stimulate local micro-economies as the new residents contribute to the demand for goods and services.
By emphasizing the importance of affordability, the New York tax abatement programs foster long-term stability in the housing market. Developers are encouraged to think beyond short-term profits and consider the broader impact of their projects on communities. This forward-thinking approach can lead to more sustainable developments that meet the needs of diverse populations, ensuring that New York City remains a vibrant and inclusive place to live.
In conclusion, the evolution of the tax abatement programs in New York City represents a positive shift towards responsible enhancing affordable housing options through financially feasible private development. With its extended tax benefits, emphasis on inclusionary housing, and potential to attract investment in making resilient communities, this incentive serves as a catalyst for positive
change from all perspectives. As developers embrace the opportunities presented by the tax abatement, the city can look forward to economic growth through the development while building a more sustainable and equitable future for its residents.
The Office Residential Accelerator. This initiative is designed to assist individuals and organizations unfamiliar with the conversion process by helping them navigate the complexities and red tape involved in transforming office spaces into residential units in New York City. The program provides various agency assistance and resources, making it easier for developers and stakeholders to successfully evaluate and execute these conversions and contribute to the city’s housing needs.
The “City of Yes” initiative is essential for transforming New York City into a vibrant hub of innovation and inclusivity.
As we face unprecedented challenges in housing, economic disparity, and urban sustainability, the approval of this initiative will empower developers to reimagine underutilized spaces, promote density, and foster diverse communities.
By breaking down outdated zoning restrictions and embracing adaptive reuse, we our neighborhoods thrive, providing affordable housing options and revitalizing the urban landscape. The City of Yes not only aligns with our
THE GRAND MADISON – 225 FIFTH AVENUE – 380,000 GSF; 193 UNITS
commitment to sustainable growth but also acknowledges the urgent need to accommodate a burgeoning population, ensuring that our great city remains a beacon of opportunity for all.
New York City has always risen to the challenges that have come along with transformative pressures. In doing so, it has continuously evolved to realize its full potential for that specific time. New York City is undoubtedly going through another transformative period, whose challenges are unique. It is being asked once again to seize the opportunity to create a thriving, accessible environment that embodies the spirit of resilience and progress it is known for.
REDUCING EMBODIED CARBON THROUGH ADAPTIVE REUSE
Sustainability in office-to-residential conversions is rooted in the principle of circularity, where existing buildings are repurposed rather than demolished, significantly reducing the need for new construction and the embodied carbon associated with it. By adapting underutilized office spaces into housing, conversions extend the lifecycle of materials, minimize waste, and reduce the environmental impact of extracting and manufacturing new building components. This approach not only lowers carbon emissions but also supports a more resource-efficient, resilient urban fabric, demonstrating how cities can meet housing demands while prioritizing sustainability.
SHAPING NYC’S FUTURE: ADAPTIVE, SUSTAINABLE, AND BUILT TO LAST
Perkins Eastman is dedicated to helping New York City address its evolving challenges, particularly in housing and urban development. As an innovative architectural and planning firm, Perkins Eastman draws on the city’s legacy of resilience and innovation, contributing to its future with sustainable design and adaptive reuse of buildings.
By prioritizing adaptability and progress, Perkins Eastman supports New York City’s transformation, meeting both current and future needs. The firm’s expertise in urban design, including adaptive reuse and office-to-residential conversions, helps address the city’s unique contemporary challenges.
With a focus on collaboration and forward-thinking strategies, Perkins Eastman is committed to ensuring that New York City remains a hub of opportunity, inclusion, and growth for all its residents.