Converting Unused Office Space into New Homes

Governor Kathy Hochul and Mayor Eric Adams today announced the Empire State Development (ESD) Board of Directors voted to enable a massive office-to-housing conversion at 5 Times Square, transforming underused office space into a mixed-use development with up to 1,250 new homes, including up to 313 permanently affordable homes. This project was made possible by Governor Hochul’s historic move last year to change 60-year-old state laws and lift the 12 Floor Area Ratio (FAR) cap on residential development in New York City, which had blocked new housing development since 1961. The 313 permanently affordable homes at 5 Times Square are a result of the Governor’s enactment of the Affordable Housing from Commercial Conversions Tax Incentive program (467-m).

As a result of these and other actions, approximately 10,000 new apartments have been completed or begun construction through office-to-housing conversions in New York City since last April. Additionally, the Governor’s FY26 budget includes $1 billion in State funding to secure the City of Yes for Housing Opportunity, an initiative that has made changes to New York City's Zoning Code that are expected to allow for up to 120 million new square feet for conversion and up to 18,000 new homes.

“We took bold action to unlock major office-to-housing conversions in New York City, and transforming 5 Times Square from underused offices into 1,250 new homes — including over 300 permanently affordable apartments — is a prime example of how we’re getting it done,” Governor Hochul said. “As I’ve made clear, the only way to address our housing crisis is to build more of the homes New Yorkers need — and I’ll never stop working to make that a reality.”

New York City Mayor Eric Adams said, “Confronting a decades-long housing crisis requires creating new housing in every neighborhood at an accelerated pace — even here at the ‘Crossroad of the World’ in Times Square. The transformation of 5 Times Square from an underutilized office building into 1,250 new homes capitalizes on hard-fought Adams and Hochul administration victories while fulfilling my plan to build 100,000 new homes in Manhattan over the next decade. Thank you, Governor Hochul, for your continued partnership in delivering the affordable housing New Yorkers need and for proving, once again, what can be accomplished when the city and state work together towards a common goal.”

The vote today by the ESD Board of Directors approved an amendment to the 42nd Street Development Project General Project Plan that will enable the conversion of 5 Times Square.

5 Times Square will repurpose nearly 1 million square feet of office space while preserving more than 37,000 square feet of retail space. The project will create up to 1,250 new homes — a mix of 1,050 studio and 200 one-bedroom units — with equal access to building amenities for all residents. The project will include over 300 permanently affordable homes for New Yorkers earning up to 80 percent of the Area Median Income (AMI).

The conversion addresses the building's high office vacancy rate of 77 percent, transforming an underutilized property into much-needed housing. Construction is anticipated to begin in Q3 of 2025, with the first phase anticipated to be completed in 2027. The building’s configuration allows for a mixed-use program that can accommodate both residential and the existing commercial occupancy. The project is expected to create approximately 1,400 construction jobs and 830 permanent direct and indirect jobs. The project will also comply with the State MWBE and SDVOB policies, with an overall 30 percent MWBE participation goal.

The project's location at Seventh Avenue between 41st and 42nd Streets offers unparalleled access to 12 subway lines and regional transit connections, exemplifying Governor Hochul and Mayor Adams’ commitment to transit-oriented development that reduces car dependency and promotes sustainable urban living.

The 5 Times Square project represents an important advancement in New York's approach to solving its housing crisis. The original construction of the building is at 33.35 FAR — nearly three times the previous residential cap of 12 FAR. This means that the new development approved today would not have been possible without the Governor’s action in the FY25 Enacted Budget to change 60-year-old state laws and lift the 12 FAR cap in New York City. Combining the removal of the FAR cap with 467-m tax incentives enables the conversion of high-density office buildings into residential use properties, bringing more affordable housing to prime locations. As part of a growing trend in reimagining New York City's business districts, projects like 5 Times Square have the potential to create thousands of new homes in high-opportunity areas.

Empire State Development President, CEO, and Commissioner Hope Knight said, “The reimagining of 5 Times Square represents a transformative approach to New York's housing and economic challenges. By converting nearly one million square feet of office space into homes—with 25 percent permanently affordable—we're advancing our strategy to revitalize central business districts and create truly mixed-income communities. This project harnesses Times Square's unmatched transit connections and commercial energy while addressing our critical housing needs, building upon our ongoing efforts to adapt underutilized commercial spaces for residential use in high-opportunity areas.”

New York State Homes and Community Renewal Commissioner RuthAnne Visnauskas said, "This development is a direct result of Governor Hochul's housing policies. Her 2025 budget lifted the 12 FAR cap and created a property tax exemption that requires affordability — these are the crucial ingredients to promote the creation of affordable and market rate housing we need in dense, mixed use and transit-rich parts of New York City. Five Times Square was a state-of-the-art office building and home to Ernst and Young for 20 years. Its conversion into 1,250 apartments is exactly what of the Governor’s plan to increase supply and bring housing costs down calls for. Now, instead of sitting largely vacant, this building will be home for generations of New Yorkers for decades to come."

Council Member Erik Bottcher said, “The conversion of 5 Times Square into more than a thousand new homes — including 313 permanently affordable apartments — is a bold and necessary step toward solving our city’s housing crisis. Thanks to the leadership of Governor Hochul and our State Legislators in lifting the outdated 12 FAR cap, we’re finally unlocking the potential of underused office buildings in the heart of Midtown. This is exactly the kind of visionary, transit-oriented development New York needs: turning vacant space into vibrant, mixed-income housing that keeps our city livable, equitable, and growing."

New York City Deputy Mayor for Housing, Economic Development, and Workforce Adolfo Carrión, Jr. said, “5 Times Square is a game-changer for Times Square and Midtown, paving the way for the future of urban growth. By converting underutilized office space into over a thousand new homes, including hundreds of affordable units, we’re reimagining central business districts as vibrant, mixed-use communities that foster both residential life and economic opportunity.”

NYCEDC President & CEO Andrew Kimball said, “The transformation of nearly one million square feet of office space at 5 Times Square to mixed-income housing is yet another way our city-state partnership is working to deliver for New Yorkers. This project – one of the largest office-to-housing conversions in New York City's history—will address the immediate, critical need for more housing, while leveraging iconic, city-owned property as a place not just to do business, but as a 24/7 live, work, play destination.”

RXR Chairman and CEO Scott Rechler said, “The repositioning of 5 Times Square demonstrates how forward-thinking policies can strengthen and reimagine neighborhoods such as Times Square. The City and State of New York have shown that, through innovative public-private partnerships, we can transform underutilized office spaces into a thriving residential community, helping to address New York's pressing housing crisis.”

This project also highlights the continued New York State and New York City partnership in addressing the housing crisis. Governor Hochul and Mayor Adams’ innovative policies are transforming underutilized office space into vibrant, mixed-income communities with direct access to jobs, transit, and amenities across the state.

Governor Hochul’s Housing Agenda

Governor Hochul is committed to addressing New York’s housing crisis and making the State more affordable and more livable for all New Yorkers. As part of the FY25 Enacted Budget, the Governor secured a landmark agreement to increase New York’s housing supply through new tax incentives for Upstate communities, new incentives and relief from certain state-imposed restrictions to create more housing in New York City, a $500 million capital fund to build up to 15,000 new homes on state-owned property, an additional $600 million in funding to support a variety of housing developments statewide and new protections for renters and homeowners. In addition, as part of the FY23 Enacted Budget, the Governor announced a five-year, $25 billion Housing Plan to create or preserve 100,000 affordable homes statewide, including 10,000 with support services for vulnerable populations, plus the electrification of an additional 50,000 homes. Nearly 60,000 homes have been created or preserved to date.

The FY25 Enacted Budget also strengthened the Pro-Housing Community Program which the Governor launched in 2023. Pro-Housing certification is now a requirement for localities to access up to $650 million in discretionary funding. Currently, more than 300 communities have been certified including New York City.