Conversion to Deliver 1,250 Homes, Including 313 Affordable Units, Under Landmark Housing Initiative

The New York State government has taken another substantial step toward tackling its persistent housing shortage by approving the transformation of 5 Times Square into a mixed-use development. The Empire State Development (ESD) Board of Directors voted to allow the conversion of nearly one million square feet of vacant office space into a combination of residential and retail uses, part of a growing trend to repurpose outdated commercial buildings for modern urban living.

Located at the heart of Midtown Manhattan between 41st and 42nd Streets on Seventh Avenue, the 5 Times Square building currently suffers from a 77% office vacancy rate. The newly approved plan is set to dramatically change that, introducing up to 1,250 residential units, 313 of which will be permanently affordable, while preserving over 37,000 square feet of existing retail space.

The approval comes in the wake of significant legislative reforms enacted last year that removed the long-standing 12 Floor Area Ratio (FAR) cap that had limited residential density in the city since 1961. The original 5 Times Square building had been constructed at a FAR of 33.35—nearly triple the former residential limit—making its conversion previously impossible without the statutory change.

“This is a prime example of how we’re getting it done,” said New York Governor Kathy Hochul. “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.”

The project is one of the largest to advance under the governor’s Affordable Housing from Commercial Conversions Tax Incentive program, a $467 million initiative designed to encourage the redevelopment of obsolete office space into desperately needed housing. Since the legislative changes were adopted in April 2024, roughly 10,000 new apartments have either been completed or begun construction across New York City through similar conversions.

The 5 Times Square redevelopment will feature a mix of 1,050 studio apartments and 200 one-bedroom units. All residents, regardless of unit size or affordability status, will have equal access to shared amenities in the building, underscoring the state’s commitment to inclusive urban development.

Construction is anticipated to begin in the third quarter of 2025, with the first phase slated for completion by 2027. In addition to housing, the project is expected to generate approximately 1,400 construction jobs and create 830 permanent positions once operational. The plan also adheres to the state’s Minority- and Women-Owned Business Enterprises (MWBE) and Service-Disabled Veteran-Owned Business (SDVOB) participation goals, aiming for a 30% MWBE inclusion rate.

New York City officials hailed the development as a model for urban renewal and economic revitalization.

“5 Times Square is a game-changer for Times Square and Midtown, paving the way for the future of urban growth,” said Adolfo Carrión Jr., the city’s deputy mayor for Housing, Economic Development, and Workforce. “By converting underutilised 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.”

The project aligns with broader goals laid out in the state’s fiscal year 2026 budget, which earmarks $1 billion to support the conversion of up to 120 million square feet of commercial space and the creation of up to 18,000 new homes. With demand for affordable housing at historic highs, state and local leaders hope this strategy will relieve pressure on the city’s strained housing market while also revitalizing neighborhoods still struggling with the aftereffects of the pandemic-era office exodus.

Officials say the building’s proximity to extensive transit options makes it ideal for sustainable urban living, offering future residents convenient access to jobs, entertainment, and services throughout the city.

With this latest approval, New York continues to position itself as a leader in adaptive reuse, merging economic recovery with long-term housing strategy. The transformation of 5 Times Square stands as a landmark example of how policy, investment, and vision can converge to reshape the urban landscape for generations to come.

Originally reported by World Construction Network.