There are about a thousand real-estate developers in New York City. Nathan Berman is one of them, and he’s become rich doing it. But, he told me recently, “I never built a building from scratch, and never wanted to.” Instead, Berman, who is sixty-four, specializes in taking existing structures and converting them into apartments, a useful trick in a city that’s always starved for housing—and newly wary of the five-day-a-week office routine. In 2017, he converted 443 Greenwich Street, a former warehouse and book bindery in Tribeca, built in 1883, into a luxury condo; among the celebrities who now own apartments there are Harry Styles and Jake Gyllenhaal. (The building was designed to be “paparazzi-proof,” so it features an underground parking area with a valet.) It’s not much of a feat, though, to redo an industrial space that has a rudimentary interior. Berman is more excited by the transformation of huge, obsolete office towers into warrens of one- and two-bedroom apartments. He compares the effort to extract as much residential rental space as possible out of such buildings to solving a Rubik’s Cube.
Since 1997, Berman, through his firm, Metro Loft Management, has turned eight Manhattan office towers into rental-apartment complexes, adding some five thousand units to the city’s housing stock. His company has just signed a contract for the largest conversion yet in the United States: Pfizer’s former headquarters, on East Forty-second Street, will be refashioned to house about fifteen hundred apartments. Berman has no patience for nostalgia. “You’re tearing down something that simply doesn’t work anymore,” he explained. Although Metro Loft has offices at 40 Wall Street, Berman often works at home himself, on the Upper East Side. He happily spends hours poring over blueprints, dividing former fields of cubicles into small but clever residences and reconceiving onetime copy-machine nooks as mini laundry rooms or skinny kitchens. All his apartments are market-rate properties, so what he creates is élite but ordinary, luxurious but cramped, permanent but marginal. Avinash Malhotra, an architect who has done several conversions with Berman, noted that a single office tower can be carved up into hundreds of little units, as in a hotel. “He is not making housing for the homeless,” Malhotra said. “But I often joke among my employees that what we do is slums for the rich.”
One day in December, I went to the financial district and joined Berman in the stark white lobby of 55 Broad Street, a thirty-story former office tower that was built in 1967 by Emery Roth & Sons. Berman has started converting it into five hundred and seventy-one apartments, many of them studios aimed at professionals just out of college. Scaffolding surrounded the bottom of the tower, imprisoning a Starbucks by the entrance. Berman dresses to understated effect. He wore a quiet-luxury ensemble—unzipped Brunello Cucinelli vest, Loro Piana sweater, John Lobb shoes—and carried nothing in his hands but his phone.
He was overhauling 55 Broad Street under complicated conditions: it still had office tenants inside. The day we visited, five of the floors were still occupied by companies that had not yet left. (One, a property-management outfit called Solstice Residential Group, even sued to stay, but ultimately settled and moved nearby.) Every so often, an office worker rushed through the lobby, looking as lonely as a ghost. The entrance was renovated twenty years ago by the building’s original owners—the Rudin family, a New York real-estate powerhouse—and featured a revolving door, white marble walls, harsh Kubrickian lighting, and a long security credenza. Berman said that he would put in a hinged door, lower the lighting, cover the walls with wood panelling, add a fireplace and an inviting couch or two, and install wide stairs that flowed down to amenity rooms on the floor below. “Walking into the building will seem like walking into a lounge that people are hanging out in,” he told me. “And you just happen to be one of the people that lives here.”
Among white-collar workers, the covid-19 pandemic led to a profound shift: even when it became safe to return to the office, many employees preferred to work remotely. Nationwide, offices are only about fifty per cent full. Since 2019, according to a recent academic study, downtown street foot traffic has fallen by an average of twenty-six per cent in America’s fifty-two biggest cities. Urban theorists describe a phenomenon called the “doom loop”: once workers stop filling up downtown offices, the stores and restaurants that serve them close, which in turn makes the area even emptier. And who wants to work somewhere with no services? In St. Louis, whole swaths of the downtown business district are vacant. Not long ago, the A.T. & T. Tower, one of the city’s marquee properties, which was sold for two hundred and five million dollars in 2006, was off-loaded for $3.6 million.
In New York, the rebound has been stronger. On Wall Street, where numerous executives have expressed sharp impatience with remote work—David Solomon, the C.E.O. of Goldman Sachs, has called it an “aberration” that undercuts the company’s “collaborative apprenticeship culture”—foot traffic has returned to eighty per cent of its pre-pandemic level. But on Mondays and Fridays many Manhattan towers become as sparsely populated as an Edward Hopper painting. Some company accountants have started to see the rental of large office spaces—which in New York can cost more than three hundred dollars per square foot—as a colossal waste. In lower Manhattan, major renters such as Spotify and Meta have begun shrinking their footprints, vacating entire floors that once bustled with employees. For the past three years, about twenty-two per cent of office space in New York has gone unrented—that’s a hundred million vacant square feet, the equivalent of nearly thirty-five Empire State Buildings. For the owners of half-empty towers, it’s become increasingly apparent that a new financial strategy is needed.
Berman has helped show desperate office-tower owners a way out. Although fewer people may want to work in Manhattan, more than enough still want to live there. The over-all vacancy rate for apartments in the city is now 1.4 per cent—the tightest market in fifty years. The reasons that the city’s work and residential fortunes have not moved in step are various. “There is only one New York,” Berman told me. “Culture, diversity, business, technology, medicine, education—all in one small island.” New York remains a place where many ambitious young people go to start their careers, if not to stay, and this demographic is ideal for the hotel-style conversions for which office towers are most suitable. Moreover, Berman said, “young people are social—they don’t want to sit in the middle of a forest on a Zoom call.”
Converting offices into apartments won’t be a panacea for New York’s real-estate titans: there is simply too much square footage that is going unused, and this will be a problem as long as companies continue switching to smaller premises. Berman told me, “If we ultimately absorb twenty per cent of the office space, that would be optimistic.” But, he added, conversions will energize neighborhoods that otherwise would be among the worst hit, like the financial district. There, Berman foresees apartments replacing half the empty offices.
The tower at 55 Broad Street has spent most of its existence as an unlovable building in an unlivable neighborhood. In the Art Deco era, the architectural firm founded by Emery Roth was an innovator—it designed the San Remo and the Beresford apartment buildings, on Central Park West—but by the late nineteen-sixties it was known for maximizing rentable office space above all else. At 55 Broad, which is right around the corner from the Stock Exchange, two adjoining ten-story structures came down to make way for a much taller new building. It was a time of rapid growth on Wall Street—between 1958 and 1973, the amount of office space downtown doubled. The design ethos was “do your own thing.” “This is not the Renaissance, or an age of uniform standards of beautiful buildings,” a member of the City Planning Commission explained to the Times in 1973. “No one agrees on anything.”
The result at 55 Broad was a dark curtain-wall tower with windows and brown panels spaced between thick steel pinstripes. Deep rectangular floors were set back every ten stories, creating a three-tiered wedding cake. Two renovations followed over the decades, but the building remained what it had always been: a dull stack of boxes.
Shortly after the Rudins built the tower, they attracted as its anchor tenant Goldman Sachs, which was then in a period of wild ascent. Four years after the building opened, a Times reporter dropped by Goldman and excitedly described an “assemblage of young men with longish haircuts and bright colored shirts” on a trading floor that “rips with action.” Goldman was so successful that it eventually built its own building, two blocks south, leaving 55 Broad half empty. In 1985, Drexel Burnham Lambert, the firm that pioneered the junk bond, moved in. Within five years, it had fallen under indictment and gone bankrupt, forcing the Rudins to scramble again. The family spent millions to make 55 Broad into a state-of-the-art tech hub, borrowing strategies from “Being Digital,” by the nineties tech guru Nicholas Negroponte. Broadband was installed on every floor, and for a time the mid-century structure was “one of the most wired in the world,” according to Forbes. This incarnation lasted until the dot-com bust of 2000, when many of 55 Broad’s tenants went under or moved out. In the next decade, terabytes replaced gigabytes, and the number of servers that a cutting-edge tech firm needed could have taken up an entire warehouse. In 2014, plans were leaked for a proposed fifty-three-story replacement at 55 Broad, but it was never built. A lot of time and money is required to safely dismantle a thirty-story tower on a narrow, busy street.
Six years later, the pandemic hollowed out the city, particularly the business districts. By July, 2023, the Rudins had concluded that 55 Broad—then only sixty per cent rented—had no future as an office tower. They sold most of their interest in the building to Berman, keeping a small part so they could observe how he handled conversions. (Silverstein Properties, which rebuilt the World Trade Center, also became a partner in the project.) The decision to convert to residential was a hard one for the Rudins. “We don’t like selling our buildings,” Bill Rudin, one of the chairs of the family’s company, told me. “That’s kind of a mantra for us.” The opportunity to learn from Berman was a big factor: “We wanted to see the maestro, like a front-row seat to see Leonard Bernstein.”
The sale price for 55 Broad was $172.5 million. The construction loan was set at two hundred and twenty million dollars. The total cost of the project—nearly four hundred million dollars—was considerable, but replacing the office tower with a new building, Berman told me, would have cost “well over six hundred million.” (Upgrading it in the hope of attracting new office tenants, according to Berman, would have cost roughly eighty million dollars.) And, because of zoning reforms, no new building would be allowed to overwhelm a Manhattan street the way the hulking towers of the postwar period did. A developer who constructed a tower the same height as 55 Broad would likely have to sacrifice twenty per cent of the rentable space.
Early in the conversion process, Berman’s construction team removed the fluorescent-tube lighting and the dropped PVC ceilings. Then workers knocked down the drywall that had once delineated corner offices, windowless offices, rest rooms, mop closets. “We do a very thorough gut renovation,” Berman told me. “We literally take everything out.” At 55 Broad, the result was nearly four hundred thousand square feet of raw space, with a potential to generate more than thirty million dollars in rental income annually. But Berman still had a major puzzle to solve: If no one wanted to work in a glum, out-of-date building, why would anyone want to live there?
In the lobby at 55 Broad, Berman pressed the Up button. “This building is way over-elevatored,” he said. Soon, five elevators would be torn out. Apartment buildings, he explained, generally need fewer than half the elevators that office buildings do. “Residents don’t mind waiting twenty seconds more for the elevator,” he said.
A visit to the sixth floor offered a bleak sight—it was an empty, dark space half the size of a football field, interrupted only by steel support beams and rusted copper waste pipes. The floor was unsealed concrete, and transverse beams along the ceiling were coated with intumescent paint, a fire-resistant covering that looks like bubbling-hot marshmallow. When I stood at the center of the building, the windows were so far away that they looked almost like portholes.
Berman gave me a detailed tour of the thirteenth floor. In his business, a crucial metric for turning a profit is the time lag between borrowing construction money and renting out units. So he works fast. Just four months had passed since Berman, Silverstein, and Rudin had closed their deal, but the thirteenth floor already felt like part of a new apartment complex. Workers were measuring, drilling, staple-gunning. Metal track had been laid down where new walls would go, and a few drywall panels had already been installed—they were covered in a playful-looking purple glaze, to make them resistant to mold. “It’s a little bit more expensive,” Berman said. “But we don’t want any issues down the road.” On one piece of drywall, “Apt. 10” was scratched in pen. There was even a handsome tub in a bathroom without walls, like a guest who’d arrived too early for a party.
Renters are now used to the layouts of chain hotels, where there’s one window by the bed, so Berman’s bathrooms and kitchens didn’t need to be sunny, and the kitchens could have a minimal footprint. “Our demographic doesn’t cook,” he said. He referred to the other rooms without windows as “home offices.” Now that working from home was common, I observed, such spaces were likely to get a lot of use. He smiled, then said that many would wind up as bedrooms. This is technically forbidden, because in New York City every bedroom must have a window that can be opened, but it’s a widespread practice nonetheless. Berman laid out a rental scenario: “Imagine two or three Goldman Sachs associates who came to New York just after college and want a little bit more spending money.” (In real-estate ads, a one-bedroom with a windowless office is often called a “convertible two-bedroom.”)
Berman told me that he could repurpose any office building to residential if the sale price was right. But he acknowledged that 55 Broad posed special challenges. Until the mid-twenty-tens, office-tower conversions in Manhattan mostly involved prewar buildings. These had narrow, smaller floors that divided easily into apartments, and because they were built before air-conditioning they often had courtyards or ventilation shafts. You therefore didn’t have to create odd layouts to give bedrooms some sun. (Natural light tends to peter out about thirty feet into a building’s interior.) Prewar buildings were also full of setbacks, which could become private terraces, and they had oak-panelled elevators that felt homey. I had recently visited the first such building to undergo a major office-to-residence conversion in the financial district, 55 Liberty Street, which long served as the headquarters of Sinclair Oil Corporation. An architect named Joseph Pell Lombardi had converted the building in 1980. I checked out the apartment of one of the first purchasers, on the twenty-third floor. The view was magnificent in three directions, the vista broken only by the gargoyles that the original architect, Henry Ives Cobb, had mounted on the Gothic Revival façade. Looking down from one window, I saw the august Federal Reserve Bank, with its vaults full of gold bars. The view matched the fantasy we all have of living in New York. As the architect Robert A. M. Stern told the Times in 1996, “Who doesn’t want to live in a skyscraper? Everybody in movies lives in apartments on the top of Manhattan.”