Office-to-residential conversions: how NYC is turning offices into apartments.

The short answerNessoo Report · nessoo.com

NYC is turning offices into apartments through three changes: the 467-m property tax break, City of Yes zoning that lets buildings built before 1991 convert, and a state fix to an old density cap. To get 467-m, at least 25% of the new apartments must be permanently affordable.

• →467-m covers conversions of non-residential buildings into rentals with 6+ units, citywide.
• →Affordable units must average 80% of Area Median Income and stay rent stabilized permanently.
• →As of October 17, 2026, new starts fall in the 30-year benefit tier.

Walk past an older office tower on a weekday and count the empty floors.

Now walk through any rental listing site and count how few apartments there are.

Same city.
Too much office.
Not enough home.

Turning one into the other sounds obvious. For years, the rules made it hard. In 2024, three things changed. Here is each one, and what a conversion has to include to get the benefit.

What changed in 2024?

1. A new tax break (467-m). New York State created a property tax exemption for converting non-residential buildings into rental housing, as long as the building includes affordable apartments. The city’s Department of Housing Preservation and Development runs it.
2. New zoning (City of Yes). The city’s zoning overhaul expanded conversions citywide and moved the eligibility date up to buildings built before 1991. Before, the cutoff was generally December 1961, with later dates in the Financial District and a few special districts.
3. A state density fix. The state’s Multiple Dwelling Law capped residential density at 12 FAR (floor area ratio). The same state budget legislation that created 467-m lifted that cap for buildings built before 1968, if certain conditions are met, including affordable units.

Put together, more buildings can legally convert, and the math works better when they do.

How does the 467-m tax break work?

Here is the short version.

1. What qualifies. Converting a non-residential building into a rental building with 6 or more apartments. Hotels do not count. It applies citywide.
2. The timing. Construction has to start after December 31, 2022 and on or before June 30, 2031. It has to be finished by December 31, 2039.
3. The construction break. Up to 3 years at a 100% exemption while the work happens.
4. The bigger break below 96th Street. In Manhattan south of 96th Street, the exemption is 90% for most of the benefit period. Everywhere else, it is 65%. Both phase down over the last 5 years.

What do the apartments have to include?

This is where the deal gets real.

At least 25% of the apartments have to be affordable. And:

1. The average has to hit 80%. The weighted average across the affordable units cannot go above 80% of Area Median Income.
2. Some units go deeper. At least 5% of the units must be affordable at 40% of AMI.
3. No more than three income bands. And no band above 100% of AMI.
4. Permanent. The affordable units are rent stabilized permanently.
5. Same front door. Affordable units share the same entrances and common areas as market units, and cannot be isolated to one floor or area.
6. Real bedrooms. Either the affordable units match the building’s unit mix, or at least 50% have 2+ bedrooms and no more than 25% are smaller than a one-bedroom.

Buildings with 30 or more units also have to pay building service workers the prevailing wage for the benefit period, with some exceptions.

Why the start date matters right now

The benefit shrinks the later you start. Per the city’s benefit schedule:

1. Started by June 30, 2026: 35-year benefit.
2. Starting July 1, 2026 to June 30, 2028: 30-year benefit.
3. Starting July 1, 2028 to June 30, 2031: 25-year benefit.

As of October 17, 2026, the first window has closed. A project starting today is in the 30-year tier.

Here is how I see it.

The program was built to reward speed. Every developer who waited just lost 5 years of benefit. The next cliff is June 30, 2028.

What does this mean for renters?

More apartments in places that almost never get new ones.

The city’s Comptroller looked at the pipeline in July 2025. It estimated that 44 conversion buildings, about 15.2 million square feet, could produce about 17,400 apartments, most of them studios and one-bedrooms for rent. Of those, it estimated about 14,500 apartments could qualify for 467-m, with about 3,600 income-restricted.

Those are estimates from that report, not finished buildings.

But think about where they sit. Office districts. Near jobs.

HPD has pointed out that most underused office space is in Manhattan below 96th Street, which includes neighborhoods with higher-than-average rents and extremely low vacancy. For renters, that means a shot at a permanently stabilized apartment in exactly those neighborhoods.

What does this mean for owners?

If you own an older office building with weak occupancy, you have options you did not have before 2024.

1. Check the build date. Built before 1991 is the new zoning line.
2. Check the start date. The tier you land in depends on when construction starts.
3. Run the affordable math early. 25% affordable at an 80% average is the price of the exemption. Price it before you price anything else.

Empty office space costs you every month it sits. The rules finally give you a way out.

“An empty office floor is just an apartment waiting for paperwork.”

Frequently asked questions

What is the 467-m tax incentive?+

It is a New York State property tax exemption, run by the city's Department of Housing Preservation and Development, for converting non-residential buildings (except hotels) into rental buildings with 6 or more apartments. At least 25% of the units must be affordable.

What are the affordability requirements for 467-m?+

At least 25% of units must be affordable, with a weighted average of 80% of Area Median Income, at least 5% of units at 40% of AMI, no more than three income bands and no band above 100% of AMI. Those units stay rent stabilized permanently.

What is the deadline for 467-m?+

Conversions must start after December 31, 2022 and on or before June 30, 2031, and finish by December 31, 2039. The earlier a project starts, the longer the benefit.

Which buildings can be converted to apartments in NYC?+

Under City of Yes for Housing Opportunity, conversions of non-residential buildings are expanded citywide, and buildings built before 1991 are eligible. Before, the cutoff was generally December 1961, with later dates in a few areas.

Cite thisCopy citation

Einhorn, Gabe. “Office-to-residential conversions: how NYC is turning offices into apartments.” Nessoo Report, Nessoo (nessoo.com), Oct 17, 2026.

About Gabe Einhorn

Co-founder of Nessoo, the verify-first rental marketplace in New York. He writes every Nessoo Report. nessoo.com

Sources

1. NYC Department of Housing Preservation and Development, 467-m: Affordable Housing from Commercial Conversions (eligibility, affordability, wage rules), accessed October 17, 2026
2. NYC Department of Housing Preservation and Development, 467-m benefit schedule (spreadsheet)
3. NYC Department of City Planning, City of Yes for Housing Opportunity (conversions, 1991 eligibility date)
4. NYC Department of Housing Preservation and Development, "HPD Launches Comprehensive Tool For 467-m Initiative," August 6, 2024 (underused office space below 96th Street)
5. NYC Comptroller, "Office-to-Residential Conversions in NYC: Economics and Fiscal Estimates," July 17, 2025 (prior eligibility dates, 12 FAR cap change, pipeline estimates)