As construction companies and developers focus on recovering from the industry downturn caused by COVID-19 in New York City, many are exploring what can be done with older properties, including hotels that have been closed due to the pandemic.
One approach to giving new life to these properties is to convert them into housing that would include affordable units. Residential conversions would also help attract new residents to commercial areas, creating more livable communities, according to James Whelan, chairman of the Real Estate Board of New York, or REBNY.
City & State met with Whelan to discuss how conversions can meet the city’s affordable housing needs and their return-to-work expectations for commercial properties. This interview has been edited for length and clarity.
How have conversions helped New York City historically?
The pandemic has raised the issue of conversions, but in the past it has emerged as thoughtful policy for a variety of reasons. The test case is Lower Manhattan. If you go back to the mid-90s from a business office perspective, Lower Manhattan really took it on the chin. There were older office buildings that weren’t very well rented from a commercial point of view. And what happened was that they implemented a 421-g incentive program that, over the following decades, really made Lower Manhattan into a classic sort of urban renaissance success story where these buildings have been redeveloped over time for residential use. You have experienced very strong residential growth in Lower Manhattan. It really helped retail. He created much more of a 24/7 environment. And that has really been a key part of the story of Lower Manhattan’s comeback.
When did the most recent topic of conversions to affordable housing come up?
We started to focus on that, not last summer, but the summer before. Mayor Bill de Blasio has set up working groups. We started calling him. I don’t think de Blasio wanted to take care of it because he had a limited time in post, and it will take a little time to set up. If you remember former Gov. Andrew Cuomo about a year ago, at our urging he came up with the idea, but they really couldn’t get it in the budget for various reasons. By the end of Parliament, $ 100 million was spent on this program called Housing Our Neighbors with Dignity Act, or HONDA, which we do not blame. It’s just a very limited scope. It is up to nonprofits to take older hotels and convert them into supportive housing. There is a need for supportive housing, but with $ 100 million and the kind of universe who is allowed to use it, we think it will have limited applicability.
So, in your opinion, what are the next steps to reassign these properties?
We must be attentive to the evolution of the city over time. So even though the 421-g didn’t have an affordable housing requirement, we think it’s important to move forward. there will also be a need for affordable housing under the program. This is going to take a lot of city-state coordination, as you’ll need changes with both state law, and you’ll need changes with city zoning and city regulations. Given the tenor of Gov. Kathy Hochul, Mayor de Blasio, and Mayor-elect Eric Adams, this is more likely to happen as it appears they want to work in a more collegial manner than we might have seen. in the past.
How do you see the return to employment for tertiary buildings?
Compare that to September 11, which is the latest real trauma to the city’s commercial market. Where were we a year and a half after September 11? That would have put us in early 2003. The site had not even been cleaned. And by the way, they were only starting to fight over what the site would look like. I think we’re in the early rounds of this ball game and it’s going to take some time to play out. The other thing that I find difficult about the conversation is that we all have to really focus on what we’re talking about. Because with remote working, I don’t think it’s a problem of just 0 or 100. That means it will be all remote, or all in the office. He’s going to land somewhere in between. What I have been told by people much smarter than me – the best business brokers and business owners – is that it will be industry by industry, business by business. So some businesses will already have or will have people coming back five days a week. Others will say, “No, I want you in two or three days a week and we’ll be flexible after that.” So it’s really going to take a while for this to all play out. We are encouraged. Leasing resumes. You have companies like Google that are making big bets in New York. They are not going to make big bets on New York City thinking their workers will be removed. I mean, it defies logic, right?