- New York City’s office market is experiencing a widening gap between top-performing Class A buildings and older, outdated office properties.
- Premium office towers continue to achieve record rental rates, while many Class B and Class C assets face elevated vacancy levels and financial challenges.
- Repositioning older buildings through lobby renovations, amenity upgrades, façade improvements, and system modernization can help owners attract and retain tenants.
- Amenities such as fitness centers, meeting spaces, lounges, food and beverage offerings, and outdoor terraces create additional value for tenants seeking smaller office footprints.
- Building system upgrades improve energy performance, sustainability, and tenant comfort while helping owners address regulatory requirements.
- Local Law 97 greenhouse gas emissions penalties create increasing financial pressure on aging, inefficient buildings.
- All-electric air-to-air heat pump technology provides a path toward eliminating operational greenhouse gas emissions while supporting modern office environments.
- A holistic repositioning strategy often combines mechanical upgrades with envelope and façade improvements to maximize effectiveness.
- Residential conversion projects represent a viable alternative for many underutilized office buildings.
- Conversion opportunities are strongest in buildings with significant vacancy or a clear pathway to future vacancy.
- New York City’s 467-m tax incentive program can provide substantial benefits for qualifying office-to-residential conversion projects.
- Vertical expansions may further enhance the economics of residential conversion projects while maintaining conversion eligibility.
The market has become a “tale of two cities.” Newer Class A buildings are achieving record rental rates, while older assets continue to struggle with vacancy and debt-service challenges.
Owners must compete directly with newer buildings by creating repositioned assets that feel and perform like newly developed properties. Modern tenants evaluate multiple options before making leasing decisions.
The lobby creates a critical first impression and often represents the highest investment per square foot. High-quality finishes and thoughtful design can immediately elevate perceptions of the asset.
Expanded amenities such as meeting rooms, fitness centers, lounges, food and beverage offerings, and outdoor terraces help attract tenants and make smaller office footprints feel more valuable and functional.
Upgrading mechanical systems and exterior façades improves performance, sustainability, and aesthetics while helping reposition older buildings for long-term success.
Owners who postpone improvements face declining net operating income as buildings become less competitive and Local Law 97 penalties continue to increase.
Some owners choose to focus on mechanical system upgrades rather than full-scale renovations. Modern all-electric heat pump systems can reduce emissions while enhancing building performance.
Building system improvements are often most effective when paired with façade enhancements that address energy efficiency and occupant comfort.
Residential conversions have become an increasingly viable solution for underutilized office assets, particularly buildings with high vacancy levels or expiring tenant commitments.
Successful projects rely on favorable acquisition costs and may benefit from New York City’s 467-m tax abatement program, which provides long-term tax incentives for qualifying conversions.
Office-to-residential conversions have become one of the most active sectors in New York, creating a strong pipeline of current and future redevelopment opportunities.
In this episode of the Ask the Expert series, Brooks McDaniel examines the challenges and opportunities shaping New York City’s office market. As premier Class A properties continue to command record rents, many older office buildings face increasing pressure from vacancy, changing tenant expectations, and evolving sustainability regulations. The discussion highlights how building repositioning can transform aging assets through targeted investments in lobbies, amenities, building systems, and façades. Brooks also explains how Local Law 97 is accelerating the need for modernization efforts and why all-electric mechanical systems are becoming a critical component of future-ready buildings. For owners evaluating alternative strategies, the episode explores the growing momentum behind office-to-residential conversions and the incentives helping drive redevelopment activity across the city. Whether modernizing an existing office property or considering a complete change of use, the episode demonstrates how strategic planning, thoughtful investment, and a holistic approach can unlock long-term value in an increasingly competitive real estate market.
As Senior Vice President of Building Repositioning, Brooks McDaniel provides overall direction and leadership to STOBG’s Building Repositioning Group. He works closely with the NYC-based executive leadership for Pavarini McGovern and Structure Tone to develop long-range strategic plans to help establish STOBG as an expert in building repositioning, particularly in the NYC market, as well as work with leadership across the organization to best leverage the company’s expertise in this important sector.
Brooks was previously Vice President of Design & Development at Extell Development Company, where he was responsible for the design of millions of square feet of residential, commercial office, hotels, retail, and educational buildings. Prior to working at Extell, Brooks was a project director at SHoP Architects in New York, where he worked on various cultural, residential, and institutional projects. Earlier in his career, he also worked as an architect at Asymptote Architecture, Davis Brody Bond, and Roger Ferris & Partners. A registered architect, Brooks earned undergraduate degrees in management and in marketing from Lehigh University and a master’s of architecture from Parsons New School in New York.
In the latest episode of the Ask the Expert series, STOBG Senior Vice President of Building Repositioning, Brooks McDaniel, explores the complexities of office-to-residential conversions. Join Brooks as he debunks common myths, breaks down cost comparisons, and discusses design challenges, zoning impacts, and government incentives shaping these transformative projects.
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With more than 25% of the country’s office stock projected to become obsolete by 2030, how is an international commercial hub like New York City adapting? Join STOBG’s SVP of Building Repositioning, Brooks McDaniel as he discusses the city’s trend towards residential conversion with commercial design leader and managing partner at MdeAS, Dan Shannon.
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