American Cities Have a Conversion Problem, and It’s Not Just Offices

There is an aging office building on Water Street in Lower Manhattan where it would make all the sense in the world to create apartments. The 31-story building, once the headquarters of A.I.G., has windows all around and a shape suited to extra corner units. In a city with too little housing, it could hold 800 to 900 apartments. Right across the street, one office building not so different from this one has already been turned into housing, and another is on the way.

But 175 Water Street has a hitch: Offices in the financial district are spared some zoning rules that make conversion hard — so long as they were built before 1977. And this one was built six years too late, in 1983.

“There’s nothing about that building — its construction, its mechanicals, its structural engineering — that prevents it from being converted,” said Richard Coles, the managing partner of Vanbarton Group, which has developed both conversions across the street. Vanbarton owned and thought hard about converting 175 Water, too. It looked for a time as if New York might change the 1977 cutoff, a simple no-cost reform to spur more conversions that had the support of Mayor Eric Adams and Gov. Kathy Hochul. A mere stroke of a pen would do it, Mr. Coles said.

But that idea died in the State Legislature this spring, along with the rest of the governor’s housing agenda. When Vanbarton concluded no change was coming, it sold the property.

That city block today tells of a problem far larger than the faltering office sector. There, the city has failed to evolve even as so much has changed around it — the needs of residents, the nature of the economy, the rise of new threats like the housing crisis and climate change.

Healthy cities must build new things and rehabilitate old ones. But they also perform regular tricks of transmogrification, turning existing building blocks into something new. Factories become loft apartments. Industrial waterfronts become public parks. Warehouses become start-up offices and restaurant scenes.

The pandemic forced American cities to make such transformations, temporarily. They turned sidewalks into restaurants, parks into hospitals, streets into open spaces. Now on a lasting and larger scale, they will need to convert offices into apartments, hotels into affordable housing, curb parking into bike lanes, roadways into transit routes, office parks into real neighborhoods.

“If these last few years have taught us anything,” said Ingrid Gould Ellen, a professor of urban policy and planning at N.Y.U., “it’s the need for flexibility, the need to be open to surprise in the way we’re going to use space.”

But over decades, that flexibility has eroded.

American cities have developed a conversion problem.

A thicket of rules

That problem is, more precisely, a tangle of interconnected problems.

Zoning codes have grown sprawling and more prescriptive. We’ve added well-intended speed bumps to development, like environmental reviews and public meetings, and they have often been used to protect narrow interests over societal ones.

We ask far more of buildings today than decades ago, including that they be accessible, sustainable, hurricane- and earthquake-proof, that they deter flying birds and provide public spaces. Each new goal, while worthy, widens the disconnect between buildings constructed decades ago and what regulation requires today.

And we’ve developed over time more rigid ideas about the built environment: that housing should gain value indefinitely, that politicians should ensure that’s so, that property owners have a right to veto change around them.

The cumulative effect today, if you want to turn an office into an apartment, or even turn your back porch into an enclosed home office? The building code says no. Or the zoning does. Or the neighbors do. Or a phrase in a decades-old state law does. Or the politicians asked to change that phrase decline to.

“What a mess we’ve created for ourselves,” said Emily Talen, a professor of urbanism at the University of Chicago who has studied zoning, or “the mother lode of city rules.”

These rules in many cities say precisely how many parking spots are needed per hundred square feet of pawnshop (different from the parking needed per hundred square feet of furniture store). They spell out the architectural flourishes builders must apply, the minimum acreage a home can occupy, or the size of individual units in an apartment building.

Today many mandates are untethered from their original intent. (Keeping slaughterhouses away from actual houses? Ensuring no one lives above wood-burning storefronts that might catch fire?)

“You’ve completely lost sight of what kind of city you’re trying to get with all those rules,” Professor Talen said.

These rules impede conversions in particular. In New York, a hotel requires a 20-foot rear yard. But a residential building requires a 30-foot one. Does that mean developers should lop off the back of hotels to make housing? Why do we draw such fine lines anyway between buildings where people sleep short-term and those where people sleep permanently? Most American cities a century ago saw no such stark distinction.

And why would we enable one office building to become housing while another across the street can’t?

The 1977 threshold in Lower Manhattan (and 1961 in other parts of the city) matters so much because zoning rules in the area say that office buildings can be larger in volume than residential ones. As a result, only about half of the A.I.G. building can legally become housing.

If that sounds silly, older buildings are allowed to ignore this rule; they can be converted entirely into housing, with some relaxed light, air and yard requirements thrown in. For them, the city extended a little more flexibility.

But that is seldom what happens.

“It’s pretty clear when you look at zoning codes — over the last century that zoning codes have existed — that they have only gotten longer and more complex,” said Sara Bronin, an architect and legal scholar who helped rewrite the zoning in Hartford, Conn. New York’s original 1916 code was about 14 pages. Today, it is nearly 3,500 pages.

Cities have accumulated more prohibitions, more prescriptions, more appendix tables. More hitches.

“I have a name for the buildup of that stuff,” said Phil Wharton, a New York-based developer. “I call it the kludge.”

Where no is the norm

There is another part of this story that isn’t about laws and formal rules, but about the politics and culture that have emerged alongside them.

City transportation officials, for example, aren’t usually required by law to hold public meetings for every bike lane, or to defer to nearby property owners with each bus route. Cities broadly hold power to alter public streets and spaces for the public good. But something similar often happens anyway — the neighbors still say no, or a local politician does, or someone threatens a lawsuit. And the city concedes (or wastes years trying not to).

These informal forces are often just as powerful as legal codes, but they can be even harder to change, said Noah Kazis, a University of Michigan law professor. Legislators can rewrite a law that caps the density of residential buildings, but it’s a larger task to uproot the idea that nearby homeowners get to veto density.

This cultural opposition to change (and deference to neighbors) grows partly out of the era of urban renewal. It stems, too, from Americans’ growing reliance on housing as a vehicle to build wealth. The more people count on rising property values, the likelier they are to block change they fear might harm it.

Americans have also become more conservative about change as society has gotten richer, Professor Kazis suggested.

“If you go back 70 years, or 100 years, or 150 years, there was a general understanding that the housing stock or neighborhood design was just not good enough. People didn’t have plumbing,” he said. “So how you fix that might be up for grabs, but whether to fix it kind of wasn’t. And that’s not true anymore.”

The universe of changes we can all agree are necessary has shrunk.

Inflexibility has also proved lucrative, or at least economically viable, for individuals and whole cities. Scarce housing boosts property values and tax coffers.

In cities like San Francisco and New York, people realized they didn’t need new growth and development to prosper, said Eric Kober, a former longtime official in the New York Department of City Planning and a senior fellow at the Manhattan Institute. That fiscal reality fostered the politics of saying no, he said.

“It’s a box that we have gotten ourselves into,” he said. “And we may not find a way out until something really bad happens.”

The pandemic, the homelessness crisis and high office vacancies have so far not been that thing in New York, he said.

One illustration: The pandemic appeared to offer nonprofit developers a rare chance to turn shuttered hotels into affordable housing. Breaking Ground, a nonprofit supportive housing developer, thought it had spotted the perfect property: the empty Paramount Hotel in Midtown Manhattan, near Breaking Ground’s homeless clients and in a neighborhood where it hadn’t been able to afford real estate in years.

The deal eventually fell apart on objections from the local hotel workers’ union. Now empty hotels at bargain prices aren’t available anymore. And none in Manhattan have been converted to affordable housing.

“There was an opportunity there — a time-limited opportunity — that unfortunately we and likely others missed,” said Brenda Rosen, the president of Breaking Ground.

At the Paramount earlier this year, the city instead opened another kind of temporary housing: an emergency shelter for migrants.

‘We are in a different moment’

The rules that enable office conversions in Lower Manhattan date to an era with echoes of today. In the mid-1990s, the financial district had been hit by a real estate recession. Wall Street was losing banks to mergers and more modern offices elsewhere. People feared a glut of outdated, vacant buildings on what had once been the most valuable real estate in America.

The city’s response in that moment seeded the long-term transformation of the financial district into a place where today more than 80,000 people live.

“There was a sense within government that you could tinker with the mechanics of economic development and social policy and make a generally better situation for the public,” said Carol Willis, an architectural historian and the head of the Skyscraper Museum. And there was a broader belief that seems lost now, she said, that people could trust government to do that.

Today, she said, “we are in a different moment.”

And yet, as the built environment has become less flexible, something quite the opposite has happened in the patterns of how we live. Many now want their homes to be offices and their offices to feel like homes and spare rooms to function like hotels. Nearby stores are an amenity for many today, not a nuisance.

“The way we are living is not about separating those things out — they’re much more integrated,” said Amit Price Patel, an urban designer with the firm Dialog who has long worked on conversion projects. “The difficulty is that our activities are more nimble than the physical infrastructure that we inhabit.”

Solving that would require, first, that we all agree a more nimble city will be a better one.