Cuomo Proposal Seeks to Turn Empty NYC Hotels and Offices into Apartments

​When we think of industries that have been hit the hardest during the pandemic, restaurants and the hospitality industry are the first to come to mind.  One proposal from Gov. Andrew Cuomo would allow owners of empty hotels and office buildings in Midtown Manhattan to convert their properties into apartments. But will it work?
 
In his 11th State of the State address, Cuomo said that opportunities for innovation have come out of the COVID-19 outbreak. One area where the Governor said we need to think outside the box is the office space industry, since many office buildings are sitting vacant due to employees working from home. Another area is the hospitality industry, since NYC has essentially closed indoor dining-and there has been a dramatic drop in tourism due to the pandemic.
 
Housing, however, is always needed.  Cuomo stated that “[t]he housing problem in our cities has gotten worse. But the crisis of growing vacancies in our commercial property provides an opportunity. We should convert vacant commercial space to supportive and affordable housing, and we should do it now.”
 
Cuomo’s proposed legislation would create a five-year period during which owners of office buildings and hotels in Midtown Manhattan could convert them for residential use.  Real estate groups like REBNY have supported this proposal, and have commented about the need for reimagining how central business districts will succeed and thrive in the 21st century (i.e., the need to create “walk to work” environments, and an increase in affordable housing).
 
Recently, the Roosevelt Hotel in Midtown closed while other hotels such as the Lucerne became homeless shelters.  So, it is no surprise that Vijay Dandapani, president of the Hotel Association of NYC supported Cuomo’s idea.  Dandapani said, “The hotel industry is the most stressed industry in the commercial property sector due to the near total evaporation of revenues since March 22. With no prospect of a meaningful revival for another three to four years, the Governor’s proposal that seeks to make it easier for owners and operators of hotels to maximize the value of their severely negatively affected assets will be welcomed by many.”
 
A spokesperson from Cuomo’s office said that details would be fleshed out in the coming days. Officials said they believe a state law would supersede the city’s zoning laws if there were any conflicts.  However, zoning remains a big issue.
 
State Senate Housing Committee Chairman Brian Kavanagh (D-Manhattan) also supports the proposal, saying “The governor is smart to focus on the opportunities that may be available to convert commercial and retail space but it’ll take some smart thinking to figure out how to do that effectively,” Kavanagh said.
 
And in what seems like a unique event where the State and City agree on something, Kavanagh said that the New York City government will have to be a willing partner to make such building conversions work.  A spokesman for Mayor Bill de Blasio, Bill Neidhardt, said of the conversion plan: “We’re reviewing it. We want affordable housing at the center of all rezonings.” 
 
It wouldn’t be a true blog post if there wasn’t at least a bit of conflict to talk about.  What will happen with the hotels that have labor contracts with the Hotel Trades Council union? It includes 40,000 union workers employed at 300 hotels.  The solution is unclear for now. An arbitrator’s ruling last year ordered 75 hotel owners to pay $500 million in back severance pay and benefits to employees who lost work during the pandemic.
 
This is one exciting development that we will certainly be posting more about.