Stop-work Orders Spread In Nyc Office-to-residential Conversions

Spreading regulatory concern over New York City office-to-residential conversions intensified after two more developments experienced work stoppages due to jobsite issues.

Inspectors fully halted work at 222 Broadway in Lower Manhattan after cracked concrete beams on the 32nd floor went unreported to officials for weeks. A partial work stoppage was issued for 750 Third Avenue in Midtown Manhattan.

The New York City Department of Buildings issues thousands of stop-work orders annually. However, these latest stoppages underscore increased scrutiny following the former Pfizer headquarters conversion scare that shook confidence in the city’s conversion strategy.

New York City Mayor Zohran Mamdani and housing leaders regard office-to-residential conversions as a strategic linchpin to ease the city’s housing shortage faster than ground-up development and construction projects. The mayor is taking advantage of 2024 tax incentives that set in motion a heftier conversion pipeline.

The city has long been a leader in conversions and is a model for other cities nationwide pursuing similar strategies to turn languishing office real estate into apartments. But alarm bells went off after a couple of columns partially collapsed during developer MetroLoft‘s 1,600-unit conversion of the former Pfizer building.

Work stoppages expand

Last Friday, the Department of Buildings announced on social media that reviews of the MetroLoft building’s stabilization and façade enclosure work had “no significant structural issues which would endanger public safety.”

But a partial stop-work order remains because of further inspections.

That incident triggered heightened analysis of the other Manhattan projects.

The 222 Broadway building, built in 1962 and served as Western Electric’s headquarters, is on its third stop-work order in a matter of weeks. Developer GFP Real Estate is converting the building into 300 apartments. Engineering firm DeSimone submitted requested repair documentation last Friday, but the full stop-work order remains active pending departmental review.

A week before the latest order, the city issued two stoppages, according to DOB database. One was for work that didn’t conform to approved construction documents. The other was for failing to provide required professional engineer drawings.

Separately, developer SL Green told the New York Times it self-identified the discrepancy, which drew the work order action, and is working with the city to lift the order quickly. Inspectors found steel welding on upper floors that didn’t match filed building plans, though officials reported no structural distress.

The developer is converting the 1957 building into 639 apartments. A spokesman told the Times that the firm discovered the problem with existing columns after initial preparation work.

Preparing for the unknown problems

SL Green’s problem dovetails with a familiar theme among conversion specialists that even careful preparation can’t catch everything.

“You just never know until you get into the older buildings and start taking down walls and exposing some of the structural elements of the building,” Andy O’Brien, a partner at insurance and risk advisory firm The Baldwin Group, told HousingWire TBD.

John Edwards, a partner at Washington-based McClennan+Partners Architects, said on a Harvard Joint Center for Housing Studies webinar that upfront analysis is vital.

“We’ve done far, far more feasibility and due diligence studies for conversions than we’ve actually done conversions,” Edwards said.

He added that, for developers, understanding a building’s structural and regulatory characteristics from the outset is just as important as the design considerations themselves.

O’Brien agreed that exploration reduces risk, but projects still need to factor in the cost of the unknown.

“The ones that I’ve seen that are really successful go in eyes wide open, and prepare for the unknown,” he said. “They have either contingencies set up or at least a source of additional funding to pay for the cost to rectify late defects that they may not have seen.”