The Conversion Factor

A largely vacant office tower in the Financial District is being prepared for conversion into a massive apartment building. The 1960s-era commercial structure at 25 Water Street (on the corner of Broad Street) is slated for conversion into 1,200 rental apartments by a partnership of three developers who recently signed a contract to acquire the edifice for $250 million, then began seeking another loan for $500 million to finance the cost of converting it to apartments.

Even by the standards of Lower Manhattan office conversions, the plan for 25 Water Street is monumental, in spite of other nearby transformations encompassing more space. The conversion of nearby One Wall Street enclosed 1.2 million square feet, for example, compared to the 1.1 million square feet at 25 Water Street. But the number of units at the latter building is unprecedented, and will make it the largest such conversion in the City’s history. (For comparison, the larger One Wall Street contains only 566 apartments.)

The building at 25 Water Street (formerly known as Four New York Plaza) was built in 1969 as back-office space for the now-defunct Manufacturers Hanover Trust Bank. Intended largely to house data processing facilities (in an era when computers took up tens of thousands of square feet of space), the building has narrow and relatively few windows, along with a fortress-like appearance. In a whimsical nod to the structure’s planned function, the architectural firm of Carson Lundin & Shaw designed a facade strikingly reminiscent of the dominant mode of information storage in the late 1960s—the data punch card.

Half a century later, this may prove to be an exorbitant bit of levity. New York zoning rules about the minimum number of windows per residential unit, combined with the premium that the market confers on natural light and panoramic views, will likely require that the building’s exterior be extensively reworked. Additionally, the 50,000-square-foot floor plates (each one larger than an acre, and roughly the equivalent of half a square city block) will challenge architects to design units that avoid long and narrow, tunnel-like floor plans.

The conversion at 25 Water Street may signal renewed interested by developers in acquiring Downtown office buildings at distressed prices (driven by the remote-work trend inaugurated during the COVID pandemic) and repurposing them as residential buildings. In June, a similar plan was announced for the mostly empty office building at 55 Broad Street (on the corner of Beaver Street), which will be converted into 571 apartments. This is a tide that has washed over Lower Manhattan at least twice before—once in the 1990s, and again in the years following the destruction of the World Trade Center. That last wave of conversions was mostly halted by the real estate crisis of 2008, which left multiple buildings, some of them only half-finished, in foreclosure, while other development sites have languished as empty lots for more than a decade. That slowdown was deepened by the economic recession unleashed by the pandemic, starting in 2020.

The 1,200 apartments planned for 25 Water Street appear likely to bring more than 2,400 new residents to the community, based on 2020 census data which indicate that the typical size of a Lower Manhattan household is now 2.02 persons. In a separate analysis of the 2020 census, the Department of City Planning found that the population residing within Community District 1—a collection of neighborhoods encompassing 1.5 square miles, bounded roughly by Canal, Baxter, and Pearl Streets, and the Brooklyn Bridge—has already jumped from 60,978 in 2010 to 78,390 in 2020, an increase of 28.6 percent. At the same time, the population per acre in Lower Manhattan jumped by 34.8 percent, from 60.4 to 81.4 persons. This means that everybody who lives Downtown gets an average of 535 square feet, an ever-diminishing space, in which to live, shop, commute, and perform every other function of daily urban existence.