Introduction: From empty desks to *euphoric* keys—NYC’s adaptive‑reuse moment
Walking through Times Square at dawn—billboards still bright, streets *active at night* easing into morning—I watched crews setting up sidewalk protections outside **5 Times Square**. A superintendent grinned: “Next stop—**homes**.” A few subway stops south, **25 Water Street** in the Financial District had cranes finishing a **soaring** overbuild as a leasing team prepped model tours. **Word!** The *promise* of conversion has jumped from theory to *roomy and comfortable* reality.
**Purpose of this guide:** give **buyers, renters, and investors** a clear, concise field manual to NYC’s headline office‑to‑residential conversions—**5 Times Square** and **25 Water Street (SoMA)**—covering **benefits, incentives (467‑m), market data, unit mix realities, timelines, and community outcomes**. Consider this your **directed and focused** path to **elevate** your next move.
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Audience & Transformation (One‑Line Formula)
* **Developers** — *Any developer* can **unlock feasibility** by **pursuing 467‑m‑eligible conversions in transit‑rich cores**, because **deep property‑tax exemptions + clear affordability rules de‑risk underwriting and compress delivery timelines**. ([NYC Government][1], [Holland & Knight][2])
* **Investors/Family Offices/1031** — *Any investor* can **capture durable, inflation‑resilient cash flows** by **backing best‑in‑class sponsors at 5 Times Square/25 Water Street peers**, because **policy tailwinds and demand for central living are catalyzing lease‑up and NOI growth**. ([NYC Comptroller’s Office][3])
* **Buyers & Renters** — *Any renter or buyer* can **elevate lifestyle and cut commute friction** by **targeting adaptive‑reuse product in Midtown South and FiDi**, because **new supply is arriving where jobs, transit, and culture *teem* toute la journée, toute la nuit**. ([NYC Government][4])
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What’s Driving the Boom (Brass Tacks)
* **5 Times Square** will convert **\~917,745 SF** of office and create **up to 1,250 rentals**, with **\~313 permanently affordable** (25% at up to 80% AMI). First phase targets **2027** completion; **equal amenity access** for all residents. ([NYC Government][4])
* **25 Water Street (SoMA)** is **the largest office‑to‑residential conversion in U.S. history** by unit count: **\~1.1M SF**, **10‑story overbuild**, **\~1,320 units**, and **\~100,000 SF** of amenities; **leasing launched** with affordable set‑asides around 25%. ([Field Condition][5], [GFP Real Estate][6])
* **The Policy Catalyst—RPTL 467‑m** (Affordable Housing from Commercial Conversions): **citywide**, but **richer benefits south of 96th Street**; requires **25% affordable** (weighted avg **≤80% AMI**), **shared entrances/amenities**, and specific **unit‑mix rules**. ([NYC Government][1])
* **Market Scale:** NYC’s pipeline includes **44** completed/ongoing/potential conversions totaling **\~15.2M GSF**, producing **\~17,400 apartments**; 467‑m is **sustaining the wave**. ([NYC Comptroller’s Office][3])
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The Two Flagships—At a Glance
5 Times Square (Times Square/ Midtown)
* **What’s changing:** Office vacancy (\~**77%** at filing) to **1,250 homes** (largely **studios + 1BRs**), with **\~37,000 SF** of retail preserved. **Construction start** anticipated by end‑2025; **phase‑one** delivery **2027**. ([NYC Government][4])
* **How it pencils:** Enabled by **lifting the 12‑FAR cap** and **467‑m**, plugged into the **Office Conversion Accelerator** to streamline permits. Recent **\$575M** financing signals capital‑market confidence. ([NYC Government][4], [Empire State Development][7], [Multi-Housing News][8])
* **Lifestyle synergy:** A **sun‑fill** perch at the *Crossroads of the World*—walk to **12 subway lines**, entertainment, sport, culture, retail **galore**. ([NYC Government][4])
25 Water Street (Financial District)
* **What’s changing:** A once “fortress‑like” operations hub reimagined as **SoMA** with **1,320 residences** and **resort‑scale amenities**—pools, pickleball, wellness, coworking. **10‑story overbuild**; façade and window re‑cuts accentuate *light wells* and **vistas**. ([Field Condition][5], [GFP Real Estate][6])
* **How it pencils:** Delivery aligned with **467‑m**; developer confirms **\~25% affordable**; completion/lease‑up timed for **2025–2026**. ([GFP Real Estate][6], [New York YIMBY][9])
* **Lifestyle synergy:** Steps to **Battery Park/Seaport**, multiple subway lines, and **old‑world sophistication** in landmarked streets. *Ah! sweet* downtown living.
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Visual Snapshot (Downloadable)
*Illustrative counts based on official releases and developer statements.*
[Download the chart](sandbox:/mnt/data/conversions_units_affordable.png).
**Sources:** 5TS counts and affordability mix; 25 Water affordability share per developer statements and 467‑m context. ([NYC Government][4], [GFP Real Estate][6])
*Observed studio shares: 5TS ≈ **84%**; 25 Water ≈ **72%** (per Comptroller analysis).*
[Download the chart](sandbox:/mnt/data/conversions_studio_share.png). ([NYC Government][4], [NYC Comptroller’s Office][3])
*RPTL 467‑m property‑tax exemption—illustrative schedules for Manhattan south of 96th Street.*
[Download the chart](sandbox:/mnt/data/467m_exemption_schedules.png). ([Holland & Knight][2], [NYC Government][1])
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Incentives, Explained Simply (No Jargon Wobble)
**RPTL 467‑m (AHCC):**
* **Where/When:** Citywide; **conversion work must start after 12/31/22 and by 6/30/31**, complete by **12/31/39**. ([NYC Government][1])
* **What you get:** **Up to 90% NYC property‑tax exemption** (duration depends on location & start date). **Manhattan south of 96th Street** gets **the deepest schedule**—e.g., start by **6/30/26** and receive **90% for 30 years**, then step‑downs. ([Holland & Knight][2])
* **What you give:** **≥25% permanently affordable** (weighted avg **≤80% AMI**), **shared entrances and amenities**, and **unit‑mix parity** (or an alternative: ≥50% of affordable units are 2‑BR+ and ≤25% are studios). **Affordable units are rent‑stabilized.** ([NYC Government][1])
* **Process help:** The **Office Conversion Accelerator** offers a single city point‑of‑contact to **streamline your delivery process**. ([NYC Government][10])
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The ROI Logic (Investors’ Cut)
* **Pipeline & Absorption:** NYC could realize **\~17,400** new apartments from **44** conversions—absorbing **>⅓** of pandemic‑era office occupancy losses in lower‑tier stock. This isn’t skylarking; it’s **counter‑cyclical discipline** with **public‑policy tailwind**. ([NYC Comptroller’s Office][3])
* **Yield Uplift via 467‑m:** Comptroller’s stylized pro‑forma shows **\~21% NOI boost** and **\~90% NPV lift** *with* 467‑m relative to a no‑incentive scenario, mainly from the property‑tax delta. **Brass tacks:** taxes drop from \~\$21 to \~\$2 per GSF. ([NYC Comptroller’s Office][3])
* **Capital Markets Read:** **5 Times Square** secured **\~\$575M** in financing for the conversion—signaling lender conviction where **policy clarity + sponsor quality** align. ([Multi-Housing News][8])
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Community Outcomes (Why New Yorkers Win)
* **Housing at the core, not the edge:** **1,250** new homes at **5 Times Square**—with **\~313** permanently affordable—**reknits Midtown** as a **24/7** neighborhood while keeping **street‑level retail** lively. Equal amenity access ends the old “poor door” debate. ([NYC Government][4])
* **FiDi rebirth:** **25 Water** transforms **1.1M SF** of underused space into a **chic** residential community with parks, transit, and *vogue* amenities—**a party** that keeps downtown **blooming at night**. ([Field Condition][5])
* **Sustainability:** Adaptive reuse **cuts embodied carbon** versus ground‑up (structure already exists) and can **ease Local Law 97 compliance** vs. leaving high‑emissions offices in place. *Maximum* win for climate and city. ([MDPI][11], [Arup][12], [Urban Green Council][13])
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Unit Mix Reality Check (Studios Galore—Pros/Cons)
**Observation:** Conversions skew toward **smaller units** because deep floor plates favor **studio/1BR** layouts.
* **5 Times Square:** **1,050 studios + 200 one‑bedrooms** (≈**84% studios**). **Great** for singles & pied‑à‑terre demand; **watch** for family‑unit scarcity. ([NYC Government][4], [NYC Comptroller’s Office][3])
* **25 Water:** **≈72% studios** per Comptroller; lifestyle amenities help **accentuate** value even as larger‑family options remain limited. ([NYC Comptroller’s Office][3])
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Current Status, Near‑Term Movements & What’s Next
* **5 Times Square:** State & City green‑lit; **construction targeted to start late‑2025**; **phase‑one** homes **by 2027**. Expect **pre‑leasing** cadence to reward early movers. ([NYC Government][4])
* **25 Water:** Overbuild topped out; **leasing launched** with **\~100,000 SF** amenities; delivery **2025–2026** runway. ([New York YIMBY][14], [GFP Real Estate][6])
* **Policy runway:** 467‑m **applications** align to **2031** commence/ **2039** complete; **City of Yes** reforms continue to **accelerate** approvals and broaden eligibility. ([NYC Government][1])
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Expert Tips, Techniques & Best Practices
1. **Target “Edge‑of‑Prime” Assets:** Improve basis & IRR durability by selecting **conversion‑friendly** structures just off marquee corridors; **avoid** “monkey handling gun” façadectomies that blow contingencies.
2. **Model 467‑m Early:** Lock **AMI bands**, **unit‑mix parity**, and **amenities parity** into **term sheets** to keep marketing **pristine** and approvals **Immaculate**. ([NYC Government][1])
3. **Phase Delivery:** Think **2027–2031** peaks; stagger C of O’s to **whet** demand and manage lease‑up velocity.
4. **MEP & LL97:** Choose **all‑electric** HVAC and envelope upgrades to neutralize penalties and **magnify** long‑run NOI. ([EP Engineering][15], [NYC Climate][16])
5. **Community First:** Bake in **street‑level activation** (retail, cultural, maker spaces) and transparent **affordable** lotteries; it’s both **refinement** and **reason**. ([NYC Government][4])
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Pros & Cons (Nuanced View)
**Pros**
* **Prime‑location living** with **cutting‑edge** amenities and immediate transit. ([NYC Government][4])
* **Deep, rules‑based tax relief** (467‑m) with clear affordability terms. ([Holland & Knight][2], [NYC Government][1])
* **Climate gains** from reuse and potential LL97 advantages vs. legacy offices. ([Arup][12], [Urban Green Council][13])
**Cons / Watch‑Outs**
* **Studio‑heavy mix** can limit family housing options; plan **2‑BR** inventory carefully to avoid **least common multiple** of interest and vacancy. ([NYC Comptroller’s Office][3])
* **Cap‑stack complexity:** Construction cost spikes + façade work + vertical additions can test contingencies.
* **Fiscal trade‑offs:** Comptroller estimates **long‑term tax expenditure** (present value) for eligible pipeline; calibrate policy benefits vs. revenue impacts. ([NYC Comptroller’s Office][3])
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Data You Can Use (Verbatim‑Level Clarity)
* **5 Times Square:** **1,250 homes**, **\~313 affordable**, **retail preserved**, **phase‑one 2027**; enabled by **FAR‑cap lift + 467‑m**; Accelerator support. ([NYC Government][4])
* **25 Water Street:** **\~1,320 units**, **10‑story overbuild**, **\~100,000 SF** amenities, **\~25%** affordable anticipated; leasing launched. ([Field Condition][5], [GFP Real Estate][6])
* **Financing Signal:** **\~\$575M** for 5TS conversion (RXR/Apollo/SLG). ([Multi-Housing News][8])
* **Program Rules:** **25% affordable**, **shared entrances/amenities**, **≤80% AMI weighted average**, **citywide availability**, **up to 90% property‑tax exemption** with **step‑down** schedule. ([NYC Government][1], [Holland & Knight][2])
* **Market Scale:** **44 projects**, **\~17,400 homes** potential, skewed to rentals/studios. ([NYC Comptroller’s Office][3])
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Conversation Starters (Use with Clients & Partners)
* **“Would you prefer the *radiance* of Times Square or FiDi’s *old‑world sophistication*—which lifestyle elevates your day‑to‑day?”**
* **“If we lock 467‑m by 6/30/26, how does the 30‑year 90% exemption change your yield on cost?”** ([Holland & Knight][2])
* **“Is a studio‑forward stack your target renter, or do we lean into 2‑BRs to capture family demand and reduce turnover?”** ([NYC Comptroller’s Office][3])
* **“Pre‑lease at SoMA now or await 5TS phase one—what’s your preference on timing vs. *vista*?”** ([GFP Real Estate][6], [NYC Government][4])
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Agent Takeaway (TL;DR)
**Adaptive reuse is NYC’s *rebirth of culture* in real estate.** **5 Times Square** and **25 Water Street** prove that **policy + design + capital** can **transition** idle towers into **sun‑kiss**, **chic** homes—**with all the perks**. Investors get **clarity** and **long‑tail** tax benefits; residents get **prime** locations and **vibrant** neighborhoods. **Has the greatest value?** The project you **advance** while others **delay**. ([NYC Government][4], [GFP Real Estate][6], [Holland & Knight][2])
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Agent Play (30/60/90‑Day Plan)
**Day 0–30**
* **Underwrite 467‑m scenarios** (start‑date sensitivity, Manhattan south of 96th vs. citywide).
* **Tour SoMA model units**; identify **view premiums** vs. amenity adjacency. ([GFP Real Estate][17])
**Day 31–60**
* **Pre‑lease strategy** for media‑savvy tenants; secure **preferred pricing** windows on studio stacks.
* **Parcel scouting** for mid‑block assets with convertible cores; engage the **Office Conversion Accelerator** early. ([NYC Government][10])
**Day 61–90**
* **5 Times Square**: register interest lists; map **2027** move‑in cohorts (post‑college + pied‑à‑terre + corporate housing). ([NYC Government][4])
* **Sustainability audit**: LL97‑aligned MEP decisions (heat pumps, envelope upgrades). ([EP Engineering][15])
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FAQs (Buyers, Renters, Investors)
* **Will affordable residents share the same amenities?**
Yes—**same entrances and common areas**; **no “poor door.”** ([NYC Government][1])
* **How long are the tax benefits?**
Up to **35 years** (plus construction period), with the **deepest** schedule for **Manhattan south of 96th**—**up to 90%** for 30 years if commenced by **6/30/26**. ([Holland & Knight][2])
* **Is adaptive reuse greener?**
Studies show **lower embodied carbon** vs. new builds and potential LL97 advantages when high‑emissions offices convert to efficient residences. ([MDPI][11], [Arup][12])
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Source Notes & Further Reading
* **5 Times Square conversion—units, affordability, timeline, retail, Accelerator:** NYC Mayor’s Office; ESD program page. ([NYC Government][4], [Empire State Development][7])
* **25 Water Street (SoMA)—scale, overbuild, amenities, leasing:** Field Condition; GFP Real Estate property/news; YIMBY updates. ([Field Condition][5], [GFP Real Estate][17], [New York YIMBY][9])
* **Financing signal (5TS):** Multi‑Housing News. ([Multi-Housing News][8])
* **467‑m requirements & schedules:** NYC HPD; Holland & Knight legal summary. ([NYC Government][1], [Holland & Knight][2])
* **Market pipeline & economics:** NYC Comptroller report (2025). ([NYC Comptroller’s Office][3])
* **Background (5TS history):** Wikipedia overview. ([Wikipedia][18])
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