Office-to-residential conversions have long been discussed as a potential solution to underused office stock. Now, in Manhattan, N.Y., that conversation is starting to turn into real movement. Developers are acting on both recent city-led initiatives and micro-level forces, particularly the sharp demand for housing across the borough.

In the latest proposed conversion, Vanbarton Group, the real estate investment and advisory firm, has acquired 1011 First Ave. from the Roman Catholic Archdiocese of New York, backed by a $250 million loan from Eldridge Real Estate Credit. The 20-story, 400,000-square-foot building had served as the archdiocese’s headquarters since 1973, but is now slated for residential redevelopment.

Vanbarton plans to transform the building into a 420-unit luxury apartment complex that will include 105 affordable units; around 8,000 square feet of ground-floor retail; and 55,000 square feet of amenities.

The firm has become one of the most active players in New York’s office-to-residential conversion space. Completed projects include 160 Water St. (588 apartments) and 180 Water St. (573 units). Meanwhile, at 980 Sixth Ave., the firm is in the final stages of converting roughly 90,000 square feet into 100 apartments. Additional conversions underway include 77 Water St., which is expected to deliver around 650 units, as well as 6 E. 43rd St. with between 450 and 500 units planned. In total, Vanbarton’s Manhattan pipeline now encompasses more than 2,200 residential units.

“The addition of 1011 First Avenue to our portfolio marks a significant step in expanding our office-to-residential conversion efforts, building on the success of nearly two decades of converting underutilized real estate,” said Joey Chilelli, principal at Vanbarton Group.

The archdiocese, for its part, announced in January 2024 that it would relocate its Catholic Center to 488 Madison Ave., a 24-story, 447,000-square-foot office tower next to St. Patrick’s Cathedral. CBRE’s Doug Middleton and Pierre Hills advised the archdiocese during the sale, while Greenberg Traurig represented Vanbarton.

Nationally, more than 149 million square feet of office space across the U.S. has been proposed for residential conversion since the start of 2022, according to Yardi Research. That includes 48 million square feet added in 2024. This coincides with a persistently high national office vacancy rate of 19.4% as of May, which is up 160 basis points year-over-year.

Back in Manhattan, roughly 23 million square feet of office space is currently being considered for residential reuse. And, demand-side pressures are also strong: Apartment vacancy remains below 2% in most submarkets, while interest in older, non-Class A office buildings continues to weaken.

Yardi’s Conversion Feasibility Index, which is designed to assess building reuse potential, ranks 19.5% of Manhattan’s office inventory as Tier I, or prime candidates for residential adaptation. Another 34.6% falls into Tier II, which may still be viable depending on layout flexibility or code compliance upgrades. These are among the highest percentages of any major U.S. office market.

Supporting the trend at the policy level, New York City launched the Office Conversion Accelerator Program in 2023 to help streamline zoning and code approvals by providing a single point of contact with city government for eligible projects. To qualify, developers must deliver at least 50 residential units.