Rethinking Urban Vacancy: A Case Study


A close-up view of the Empire State Building, credit: Christine Leonhardt

Across the City of New York, office vacancy coupled with a rapid decline in affordable living space presents an unprecedented crisis for residents and businesses. Unlike the physical destruction following the September 11 attacks in which all levels of government were required to rebuild Lower Manhattan, our current vacancy dilemma is less visible yet calls for similar collective action. Using the iconic Empire State Building and surrounding streetscape as an exploratory tool, I imagine what a transformation of Manhattan’s central business districts could look like with efficient use of limited land area. Through a comparison to interventions undertaken in the post-9/11 climate, I aim to construct futures to maximize the community value share of readily accessible urban space. As the COVID-19 pandemic continues to show us, central business districts are a dying breed. We must effectively utilize the planning and policymaking tools we already possess in combination with revolutionary legislation and stakeholder buy-in to transform desirable 9-to-5 spaces into vibrant, viable, 24-hour landscapes for broad community benefits.

The aftershocks of the COVID-19 pandemic not only affected social and work gatherings, but also proved that development patterns reliant on in-office work are insufficient for the real estate market at large. Over two years since the onset of COVID-19, office occupancy in ten of the largest cities across the United States hovers below half of its pre-pandemic levels. In New York City, only 38 percent of office workers had returned to their workplaces in August 2022. Based on data provided in June from the City Comptroller’s Office, 21 percent of Manhattan office space is under- or differently utilized. This exceeds the vacancy rates of the 1990s recession and the 2001 and 2008 economic downturns. Concurrently, median residential rents across the city have experienced increases of between 20 and 30 percent in comparison to listings only three years ago. As reported in July of this year, the average monthly rent for a Manhattan apartment surpassed $5,000 for the first time. According to a Real Estate Board of New York report, about 560,000 apartments must be built by 2030 to accommodate the city’s projected population growth. To make matters worse, the Mayor’s Management Report revealed that only 16,042 of a promised 29,408 affordable housing units had kicked off by the close of the 2021 fiscal year.

New York City is known as the financial center of the United States with much of its urban form resulting from novel planning and policy initiatives such as the 1916 Zoning Resolution. One iconic example, the Empire State Building, offers an exciting opportunity to reimagine urban vacancy as it struggles to efficiently fill its office and retail space and, like many of its counterparts, does not offer any residential housing. The New York Times’ 2021 report revealed that 41 percent of the Empire State Building’s tenants intended to stay but were adapting to a hybrid work model, while five percent intended to vacate. Of the nearly 45 percent of office space utilized by tenants that did not specify whether their plans were to renew or vacate, 8 percent of that space was already listed for lease. While these numbers do not immediately alarm, the report argues that whether a company had the option to leave was generally determined by its lease agreement, noting that all of the tenants who said they already left the building, or planned to, were in leases or sublet agreements that were set to end during the pandemic or soon thereafter. Other businesses now nearing their lease term limits may also choose to vacate, as a reported 16 percent of active Manhattan office leases covering more than 33.9 million square feet will expire by the end of 2022 with similar forecasts for the following three years. These realities tend to question the concept of “central business districts,” especially given the low volume of rentable residential space in a city plagued by barriers to homeownership and ever-decreasing investment and emphasis on public and affordable housing programs. If the world’s most celebrated office building struggles to overcome vacancy issues, what chance do Manhattan’s other central business districts have to survive?

An evening view of the Empire State Building, credit: Christine Leonhardt

Among the most impactful tools at the City’s disposal are zoning resolutions and tax incentives for converting commercial to residential, as well as strategic financial relief allocation. These measures are especially effective when utilized in a citywide emergency, as proven through the joint public and private effort to use existing zoning allowances, tax abatements, and disaster assistance funding to rebuild Lower Manhattan following the September 11 terrorist attacks. A 421-g tax incentive called the 1995 Lower Manhattan Conversion Program allowed some 19.7 million square feet of space to be converted for residential use, with 76 percent of those conversions occurring after 2001. Also, financing from the Federal Emergency Management Agency (FEMA) was a key factor in the reconstruction process. Through FEMA’s public assistance program, $7.4 billion was allocated to New York City to aid in its disaster recovery. Additional assistance was provided through the Liberty Zone Tax Package that furnished economic subsidies to businesses and gave the City and State authority to issue tax-exempt bonds of at least $6 billion to finance the construction of new office space and residential units. The Lower Manhattan Development Corporation and Empire State Development Corporation similarly oversaw the allocation of $3.45 billion of federal aid directly targeted to compensate businesses for economic losses, to encourage job retention, provide financial assistance to residents, and help rebuild infrastructure in lower Manhattan. This combination of relief financing and opportunistic zoning- and policy-informed redevelopment directly benefited Lower Manhattan by encouraging mixed uses with an emphasis on accessible public spaces, resulting in the effective transformation of the district from strictly commercial.

The Cipriani Club Residences at 55 Wall Street, credit: Christine Leonhardt

Relief programs were deployed throughout the COVID-19 pandemic to address rent and operational burdens on businesses such as the New York Forward Small Business Lease Assistance Partnership and the COVID-19 Capital Costs Tax Credit Program. While these programs targeted office space, they offer support funding rather than transformative actions that could provide long-term benefits for central business districts. Before shutdowns, Midtown was reliant on workplace and tourist traffic, and was therefore vulnerable to instability due to its emphasis on non-residential spaces. Additionally, the majority of Manhattan’s commercial buildings lie below the C-7 and C-8 designations that prohibit residences. Using the post-9/11 precedent for reimagining land use following citywide social and economic depression, similar interventions could be enacted to achieve multipurpose benefits rather than fragmented approaches to address single issues.


Residences at Twenty Exchange Place, credit: Christine Leonhardt

For the purposes of this case study, we look to one of Midtown Manhattan’s most iconic structures, The Empire State Building, through which revitalization can be achieved by a coordinated public-private approach. In its current state, the building primarily operates as a home to corporate offices and as a tourism destination. Situated on West 34th Street between 5th and 6th Avenues, it benefits from its proximity to a multitude of subway stations, connections to New Jersey, and busways. Commercial businesses, workplaces, restaurants, cafes, theaters, and retail stores are conveniently scattered within a short walk’s distance. On any given Friday in June before the pandemic, the sidewalks were full of life, featuring lunchtime diners, midday errand-runners, and out-of-towners looking to experience the greatest city in the United States. In the post-pandemic environment, the very same bustling sidewalks are now only spotted with those whose employers have mandated in-office work. The Empire State Building and its surrounding streetscape are missing the main factor in community sustainability: its residents.

The Empire State Building falls within the C5-3, C6-4.5, and Special Midtown zoning districts, with its residential equivalent an R10. A combination of planning and policy initiatives is required to spur residential development here due to the structure’s historic nature, the district’s current zoning, and lack of related incentives, as well as the lengthy Uniform Land Use Review Procedure process needed to effectively change the zoning code. Most recently, the long-awaited 2017 approval of the Midtown East Rezoning paved the way for a “new era” of modern office development with goals to protect and strengthen East Midtown as one of the world’s premier business destinations, seed the area with new modern and sustainable office buildings, improve the area’s pedestrian and built environments, and complement ongoing office development in Hudson Yards and Lower Manhattan to facilitate the long-term expansion of the City’s overall stock of office space.

Outside the Empire State Building along West 34th Street, credit: Christine Leonhardt

In the post-pandemic, work-from-home period that is likely to replicate with the next communicable virus, rezonings among the likes of Midtown East are less effective although seemingly more attainable within our current policy framework. Conversely, what is really needed in this time of housing shortage and unaffordability is a sweeping reallocation of habitable space rather than coordinated measures to increase commercial traffic. Office buildings in Midtown East and most other parts of Manhattan’s business districts built before 1961 are generally allowed to undergo residential conversion, placing the Empire State Building well within current regulations. To this end, more radical and swift interventions are warranted, if even through a site-specific scope.

Initiating a robust public program targeting Midtown’s central business districts similar to those following September 11 is the first step in addressing the vacancy-affordability crisis. This program will incentivize broad community benefits in the district through public-private funding and rezoning characteristic of disaster recovery and mitigation interventions aimed at long-term social and economic viability. The primary actions include retrofitting single-use office buildings to accommodate mixed income residences through increased mandatory inclusionary housing requirements and related bonuses, less stringent housing eligibility compliance, as well as a permanent reallocation of public space as shown feasible through projects like the Elevated Acre and open streets initiatives. Furthermore, enacting minimum vacancy regulations that are increased along transit corridors may catalyze existing buildings to retrofit underutilized space. In the case of the Empire State Building, this could be achieved through identifying vacancies, utilizing residential conversion incentives to finance retrofitting, encouraging Midtown commuters to relocate through affordable rates, and mandating first-floor commercial with a designated percentage allocated to locally owned businesses.

The Lower Manhattan reconstruction and reallocation of space following September 11 shows the potential for reimagining central business districts. Through collective action, the community married funding, zoning regulation, and tax incentives to effectively create a more sustainable neighborhood. COVID-19 poses a lasting, potentially more destructive threat to the entire city as its long term effects increasingly hurt the most vulnerable residents unable to afford rents requiring six figure salaries. Conversion of underutilized, accessible space to affordable, residential uses is just and imperative, especially in the unstable economic environment wrought by COVID-19. A national reinterpretation of what disasters are and how they are addressed with regard to basic human needs can be linked to land use and regulation. There is a proven track record of opportunism in post-disaster planning to create walkable, connected, inspiring, and economically viable places often bolstered by focal point projects such as the Empire State Building. While the task seems daunting to repurpose one of the most iconic New York structures from a half-vacant tourist attraction to a vibrant community space, there is demonstrated urgency and available resources to do so.

Schayne Fox is a second year MUP student and transportation planner fascinated by planning and policy mechanisms that utilize built environment initiatives as a tool to combat social inequities.

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