Nathan Berman has helped rescue Manhattan’s financial district from a “doom loop” by carving attractive living spaces from hulking buildings that once housed fields of cubicles

We’ve previously discussed the difficulties of converting office buildings to residential housing. The New Yorker has a profile of a developer who specializes in it:

Since 1997, Berman, through his firm, Metro Loft Management, has turned eight Manhattan office towers into rental-apartment complexes, adding some five thousand units to the city’s housing stock. His company has just signed a contract for the largest conversion yet in the United States: Pfizer’s former headquarters, on East Forty-second Street, will be refashioned to house about fifteen hundred apartments.

…

All his apartments are market-rate properties, so what he creates is élite but ordinary, luxurious but cramped, permanent but marginal. Avinash Malhotra, an architect who has done several conversions with Berman, noted that a single office tower can be carved up into hundreds of little units, as in a hotel. “He is not making housing for the homeless,” Malhotra said. “But I often joke among my employees that what we do is slums for the rich.”

…

For the past three years, about twenty-two per cent of office space in New York has gone unrented—that’s a hundred million vacant square feet, the equivalent of nearly thirty-five Empire State Buildings. For the owners of half-empty towers, it’s become increasingly apparent that a new financial strategy is needed.

…

Converting offices into apartments won’t be a panacea for New York’s real-estate titans: there is simply too much square footage that is going unused, and this will be a problem as long as companies continue switching to smaller premises. Berman told me, “If we ultimately absorb twenty per cent of the office space, that would be optimistic.” But, he added, conversions will energize neighborhoods that otherwise would be among the worst hit, like the financial district. There, Berman foresees apartments replacing half the empty offices.

…

In his business, a crucial metric for turning a profit is the time lag between borrowing construction money and renting out units. So he works fast.

…

Renters are now used to the layouts of chain hotels, where there’s one window by the bed, so Berman’s bathrooms and kitchens didn’t need to be sunny, and the kitchens could have a minimal footprint. “Our demographic doesn’t cook,” he said. He referred to the other rooms without windows as “home offices.” Now that working from home was common, I observed, such spaces were likely to get a lot of use. He smiled, then said that many would wind up as bedrooms. This is technically forbidden, because in New York City every bedroom must have a window that can be opened, but it’s a widespread practice nonetheless. Berman laid out a rental scenario: “Imagine two or three Goldman Sachs associates who came to New York just after college and want a little bit more spending money.” (In real-estate ads, a one-bedroom with a windowless office is often called a “convertible two-bedroom.”)

…

What are left are postwar structures—many with deep, dark interiors, low ceilings, and scant visual appeal. Berman did what he could to add comfort to such buildings while holding on to his wallet. He could repurpose extra elevator shafts as garbage chutes, for example. In one building, he turned elevator-shaft spaces into foyers for a line of apartments.

…

Residents would be provided with compact hvac units under certain windows, as in a motel. These units required much less space than the old systems, and were far more energy-efficient. Berman noted that 55 Broad would be the first all-electric, emission-free apartment building in Manhattan. This was not only environmentally beneficial; it also saved him the cost of inserting thousands of feet of piping into concrete floors.

…

As expensive as these projects may seem, the cheaper cost of repurposing an old building can allow rental prices to be set lower than they would be in a new one. Berman estimated the minimum monthly rent for a studio apartment in a new lower-Manhattan building at well over four thousand dollars, whereas a comparable apartment in 55 Broad will go for about thirty-five hundred. Although this is a considerable sum for one person, it’s not especially expensive by Manhattan standards, and, as Berman acknowledged, many of his units will end up being shared.

He stressed to me that he is not particularly interested in what goes on inside the apartments, or in what the tenant experience is like. “A renter is not a condominium owner,” he told me several times. He isn’t trying to re-create 443 Greenwich Street, his celebrity-friendly condo development, with its wine cellar and tiled hammam. “Our profile is a young person,” he said. “Maybe twenty-four, twenty-five, who stays one or two years, maybe three. They’re not committing.” His clients are in the city-hopping phase of life: “ ‘O.K., next year, the year is up and I’m going because I need to be in Boston, or I need to be in Chicago, or I’m going to San Francisco.’ ” Berman had considered improving 55 Broad’s dated façade, but decided that it was money poorly spent. “Renters pay less attention to these things,” he said.

…

He focusses only on buildings built before certain years—1977 below Murray Street, and 1961 for the rest of Manhattan—because they can be converted without special variances. (Conversions have long been restricted in Manhattan because sudden population surges in residential neighborhoods can crowd schools and overwhelm public transport.) “Life is short,” he told me. “I don’t want to wait two or three years for rezoning.” A current zoning-change proposal, which Mayor Eric Adams supports, would allow any building in New York built before 1990 to be converted. It would add to the pool of potential apartments nearly as much office space as there is in all of Philadelphia. Berman hopes that the zoning change will become law by the end of the year.