Office Glut Is Finally Shrinking Amid Conversions and Falling Values

After decades of relentless office construction, the U.S. market is finally seeing its office glut shrink. According to CBRE, office supply is on track to contract in 2025 for the first time in 25 years, as developers demolish outdated buildings and convert others into apartments. Conversions, which were once cost-prohibitive, are becoming economically feasible due to falling property values, revised zoning codes, and generous tax incentive programs.

In New York City, approximately 40 million square feet of office space is expected to be converted into residential space over the next five to ten years, a doubling of the estimate from two years ago. Projects like developer Scott Rechler’s 5 Times Square redevelopment—adding 1,250 apartment units—are emblematic of this shift. Rechler secured a 90% tax abatement and purchased the 1.1 million-square-foot office property at a 40% discount from its 2019 value...

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RSK: Not a lot of conversions here other than Hovde`s Capital Square Bldg.