High Rises on the Rise

One of life’s great delights, as Ross Gay might say (or he might not), are weekends in early fall, as the degrees fall from 70 to 60, then 60 to 50, and as late September becomes early October. Everyone has their routines for this delightful juncture of the year, maybe going to get coffee in the morning, or cooking in the afternoon, possibly a breezy nap around 4 o’clock. But if one’s routine happens to include a trip to Starbucks, particularly the location on 85th and Madison, it’s impossible to miss the missing chunk of the neighboring corner. Half of 84th and Madison is simply gone. There is a gaping hole where there were once businesses and brownstones. The pile of rubbish and construction vehicles are rather depressing and frankly ugly.

Unfortunately, this blinding monstrosity is not unique to this Starbucks nor this one block. All over Manhattan, high rises are on the rise. More and more brownstones and businesses are being torn down to make way for giant buildings, disrupting the eyeline and the skyline. Just on the block of 83rd Street alone, one high rise was completed last year and two are in progress currently. 200 East 83rd was completed in 2023 and stands 35 stories high with 86 condominium units. The cheapest apartment in that building currently on the market is priced at 5.9 million, and the cheapest overall is priced at 2 million. It was developed by Naftali Group and Rockefeller Group, who received a 176 million dollar loan to build. The previous building occupying the corner was a homey, pre-war apartment building. In the early 2000s, it was a small brunch restaurant called Wicker Place, then a coffee shop called Coffee Bean & Tea Leaf, then a gaping hole and hardhats.

The process to develop one of these high rises is not simple, even though it’s happening all over. First, a developer group partners with investors who receive a land loan; 40% of the land is then paid with the loan. After that, they must receive a separate construction loan, which is given depending on the appraised value of the future property. The developers usually finance the majority of that loan. The profits of the building are then split among the developer group and the investors, but usually 20-50% goes to the developers. Here is the short answer as to why these are being built everywhere: there is just not enough housing in New York City or any American city for that matter.

In the last year, just 1.4% of apartments in Manhattan were available to rent, and under 1% of those were priced below 2,400 dollars a month. Beyond that, the median cost to buy one of the 6,700 available units was estimated to be about 1.4 million dollars. The scarcity of these homes contributes to their absurd and unattainable prices. So, there must be an answer besides the destruction of classic New York architecture and the construction of luxury, towering residences.

The pandemic happened to leave behind a possible answer to this problem. Parties ended early; taxis disappeared; avenues were empty of people. The city was essentially deserted while everyone hid in their homes. Part of this desertion meant nobody was going to work, which meant the towering office buildings in midtown and downtown were empty. While people have returned to work now, many still work from home and over Zoom. New York City’s five boroughs comprise 730 million square feet of office space, far more than any city in America. Along with having the most office space, New York also has the priciest office market, both in terms of rent and sales. The vacancy rate has doubled from 8% since the start of the pandemic, a level not seen since the 1990s. Why leave these towers empty when there’s a housing crisis and an apartment shortage?

There are a few obstacles when it comes to converting office buildings into residential buildings. The first of them is that office tenants generally pay more money because they pay for common spaces such as conference rooms and hallways. That implies that the residential rent rates and office vacancy rates must be substantially high to make up for lost revenue. The second obstacle is that conversions are technically expensive and complex. Construction costs often exceed $400 per square foot. The third obstacle is city zoning laws. There are many zoning laws in place that dictate which districts are meant for which types of buildings. There are other zoning laws that say some buildings cannot be converted, depending on what year they were built. Despite these challenges, many major conversions are underway, and the city is also amending many zoning laws to help ease that process.

The “city of yes” zoning amendment instructs neighborhoods to build as much housing as possible. There is also a tax exemption for conversions and construction when projects return 25% of their housing for individuals that make 80% of the average income. There are 64 owners of office buildings currently interested in turning residential, and the largest projects underway right now are 25 Water Street, 55 Broad Street, 650 1st Avenue, 17 Battery Place, 90 John Street. Built in 1969, 25 Water Street was the former headquarters of JP Morgan. It’s a towering, 22-story office building in the heart of the financial district that’s been visible in the New York skyline since its construction. Deserted after the pandemic, it’s being converted into residential housing set to be completed in 2025. Creating 1300 rental units, will be one of the biggest conversions in US history. Much of its old facade will be replaced with more modern, extensive glass, and the gut renovation of 1.1 million square feet. After its completion, it will be a towering modern high rise, not a pretty sight, not representative of New York’s soul, but nothing was sacrificed for its creation. And this one renovation is creating more units than any single Upper East Side high-rise has available. The average unit will rent for $2,000 a month, which is still a mostly unattainable price, but it’s not quite as scary as $5.9 million.

Another major project is underway at 55 Broad Street, the former headquarters of Goldman Sachs, completed in 1967. Renovations began in 2023, and are also expected to finish in 2025, creating 571 units. These units will rent for around $4000 a month, which is slightly pricier, but the building contains more amenities. And as with 25 Water Street, it is a smart use of New York’s existing space in an already overcrowded city that can’t afford (figuratively) to tear down anything else or build anything up. Another benefit to these real estate makeovers is that they revive dying neighborhoods. When office tenants move out, the businesses around the area close due to lack of foot traffic. It’s known as a doom loop: If Trevor were to move out, Go Cups would in turn close.

It’s not a perfect world: there are still many vacant office buildings, many endless construction projects, many new high rises (and more to come), and, most gravely, many people without homes. But using what the city has to offer, and taking advantage of what already exists without sacrificing history, helps work towards a solution. The more housing that becomes available, the more the prices of that housing go down. The city’s government could and should assist more than they do with the challenges. Amending zoning laws and offering tax exemptions is a start. But until real time and money is put into this idea so conversions can happen faster and more widely, it’s difficult to effectuate change.

There are no ancient churches dating back to the 1000s or Athenian statues or Fountains of Trevi to be found in Manhattan, but it’s the New York American Version that’s lost when new, modern high rises are built. It’s brick and brownstones and fire escapes that craft the skyline only found here. These - often pre-war - structures are the soul of the city, and hold the secrets and stories of early New York.