For all the talk about converting New York City’s dilapidated office buildings into housing, only one neighborhood has done so on a large scale: the Financial District.
In recent years, luxury apartments have been created from a 1907 office tower at 84 William Street and an Art Deco skyscraper at 1 Wall Street, which was once the headquarters of the Bank of New York. Five more office buildings will be gutted and converted into homes, including the largest such conversion project in the United States.
But the high-rise conversions are just part of a wave of change in the area that began decades ago with the redevelopment of low-rise buildings and continues today with giant glass and steel towers.
The name “Financial District” has become something of a misnomer, as the area once derided as a desert after bankers commuted home has become a vibrant residential enclave at the southernmost tip of Manhattan.
The area, roughly bounded by Chambers Street and the Brooklyn Bridge to the north and the West Side Highway to the west, is now home to 66,000 residents (up from 13,700 in 1990). There’s even a new Whole Foods.
The Financial District’s shift offers a roadmap and a glimmer of hope for what could happen in neighborhoods from Lower Manhattan to Midtown Manhattan, which are facing a flood of empty offices as companies continue to shed space in the wake of the pandemic. Real estate analysts believe that a large portion of the buildings – particularly decades-old offices with outdated floor plans – will remain unattractive to most companies and will have to find another use.
Mayor Eric Adams and Gov. Kathy Hochul have championed housing conversion as a solution to both the office surplus and another major problem, the city’s housing shortage. But only a few buildings manage change. Such modifications can be expensive and impractical because it is difficult to create light-filled homes from dark, deep interior spaces.
The reshaping of the Financial District was the result of two setbacks — the exodus of banks and insurance companies from Lower Manhattan to Midtown and the Sept. 11 attacks — that have resulted in parents increasingly replacing 9-to-5 workers be replaced, push the stroller.
The area’s compact lots resulted in a preponderance of slender buildings with high ceilings and large windows, making conversion easier.
Since the beginning of the pandemic, almost 1,500 apartments have been added in new buildings and renovations in the district. Thousands more are expected in the coming years, including what is believed to be the nation’s largest conversion: 1,300 apartments in an office tower that JPMorgan Chase vacated in early 2021.
Cory Levy, 26, said he has long been fascinated by the Financial District’s charms, such as its short streets, reminiscent of the time when the Dutch settled the area as New Amsterdam, before Manhattan was laid out on a grid.
But friends warned him not to move there.
“They said it was a ghost town,” Mr. Levy said.
He decided to explore after work and visit a rooftop bar, restaurants and cafes.
“It’s not the East Village,” he said, “but it is residential, and if you like to go out late at night and do something, there are places to eat and drink.”
He loved the area and in April signed a lease with his girlfriend for an apartment, a one-bedroom apartment in a 57-story former office tower that was remodeled in 2008.
Mr Levy said the area had major advantages over other parts of the city. About half of the city’s subway lines stop nearby, as do several ferries and the PATH train to New Jersey. There are drawbacks, he acknowledged: Sunlight can be hard to find in the narrow corridors.
The transformation of the Financial District began in the mid-1990s, when the office market faced similar challenges. As vacancies rose, state lawmakers approved tax incentives for developers who converted dilapidated office towers into apartment buildings. A construction boom followed.
By the time the incentives expired in 2006, nearly 13,000 units had been created, according to a Citizens Budget Commission analysis. According to the Downtown Alliance, a nonprofit that manages the local business improvement district, there were a total of about 7,400 apartments in the area before 1990.
Even after the incentives expired, office remodeling continued, but at a slower pace. Joey Chilelli, managing director of the Vanbarton Group, a real estate firm, predicted that the recent hit to the office market will most likely lead to further transformation in the Financial District, sometimes called FiDi.
According to real estate firm Colliers, the neighborhood has the highest office vacancy rate in Manhattan. Nearly 27 percent of office space is leased, the group said, up from 11 percent before the pandemic.
The Vanbarton Group is redeveloping the neighborhood’s latest redevelopment, creating 588 apartments at 160 Water Street. The company purchased the property in 2014 and had planned to keep it as an office until the pandemic hit. Apartment rentals start this winter.
“A lot of buildings down there are ripe for remodeling,” Mr. Chilelli said. “There will be a further march forward as people discover that FiDi is actually a great place to live.”
Over the years, some of the city’s earliest skyscrapers, including 15 Park Row, became residential buildings. But so are many modern office buildings that struggled to retain business tenants in the 1980s and 1990s, including 90 William Street near the Federal Reserve Bank of New York.
Ruth Cheng was one of the first tenants to move into 90 William Street in 2008, purchasing a condo with her husband after viewing a model apartment. They raised two children there until they had a third and needed more space.
“We didn’t even look elsewhere,” said Ms. Cheng, 49, adding that her children’s schools were in the neighborhood. “We wanted to stay with FiDi.” The family now lives in a new building two blocks away.
During the family’s 15 years in the area, several schools and new restaurants and stores opened, including at the nearby South Street Seaport. One of the neighborhood’s newest businesses is Best Sicily Bottega, an Italian cafe and grocery store on Beaver Street.
The store’s founders, Silvia Lombardo and Nicolas Calia, met through Instagram during the pandemic and learned that they both lived in the financial district and grew up ten minutes from each other in Sicily. When they met, Ms. Lombardo owned an online store that sold Italian goods, but she wanted to showcase them in a brick-and-mortar store, along with foods like olive oil cake and meatballs made using her family’s recipes.
With their shared love of Sicily and food, they opened the shop across from Ms. Lombardo’s apartment in May. They said they hadn’t considered opening elsewhere and decided to stay open after hours to serve take-out dinners to locals, such as pasta on Fridays.
“We really believe something is changing here,” Ms. Lombardo said.