Office-to-residential conversions have surged in major cities as older office buildings sit vacant while housing demands increase, but the emergence of the buckle column at developer Metro Loft’s 235 E. 42nd Street project in New York City has the potential to raise the risk profile of conversions as real estate investors reassess their appetite and risk involvement.
The conversion of the former Pfizer headquarters in midtown Manhattan is one of the largest office-to-residential conversion projects in the United States. It involves both the Pfizer Building, built in 1960, and an adjoining office tower built much earlier that was being added to, with the goal of developing 1,600 rental apartments and amenities such as a rooftop pool and fitness center.
When the project began last year, it was overseen by 235 GC LLC, a single-purpose general contracting entity created specifically to deliver the project by Metro Loft and co-developer David Werner Real Estate Investments.
Only two subcontractors on the project, the fire protection and elevator installation companies, were union contractors, unusual for large works in Manhattan.
There were a total of seven project safety violations totaling $32,000 issued by the city’s Office of Adjudication and Administrative Hearings in 2025, according to the New York City Department of Buildings. Those included citations for a worker who fell 6 feet from a ladder, one for failing to report the accident to department officials, one for a piece of debris that fell into the street and another for work not adhering to the project’s construction documents.
More than a dozen workers have filed suit against the contractor, alleging that they were seriously injured on the job in different incidents.
Cliff Johnsen, a business agent for Steamfitters Local 638 in New York City, told ENR that crews from his union were on the project installing fire protection when the buckling columns were discovered.
“All we want is responsible construction in New York City, we want them to be union workers,” Johnsen says. “They didn’t shore up the job properly. The beams started to cave in, the floors started to cave in.”
According to documents filed with the department, the conversion of 235 E. 42nd St. involved adding four new stories, raising the building from 33 to 37. The project also called for 19 new stories on top of the building next door, a 10-story tower at 219 E. 42nd St., built in 1905.
Metro Loft did not immediately respond to questions for this story, but Nathan Berman, its founder and managing director, told The Wall Street Journal that “at some point, the design team identified that the existing structure, perhaps with a little reinforcement, could support the above addition,” he said. “Clearly, based on what we’re seeing, that’s not the case.”
Although city officials say the building has stabilized, it has continued to change since its evacuation.
Complex conversions, faster changes
Last October, Bloomberg spoke with Metro Loft about the Pfizer headquarters and office-to-residential conversions in general. At the time, Robert Fuller, director of project architect Gensler, said, “It’s a bit of a surgery. There are just a lot of technical challenges and unique floor-to-floor conditions. All of those things collectively make this effort quite unique and I’d say probably more challenging than any other that I can think of.”
A rendering of the planned office-to-residential conversion of the former Pfizer headquarters in midtown Manhattan. Image courtesy of Gensler
Unlike other big cities, the incentives for office-to-residential conversions in New York City that were passed during the administration of former Mayor Eric Adams — and supported at the state level by Gov. Kathy Hochul — focus almost entirely on tax breaks and abatements at the end of a conversion project, rather than money from tax increment financing or other public money to support the conversions.
A particular incentive is New York City’s Rule 467-m, which allows tax abatements for up to 35 years. To qualify for the tax benefits, at least 25 percent of the housing units must be affordable, which was approved to get Pfizer’s conversion.
In the Bloomberg interview, Berman said the speed and ability to do conversions quickly, compared to new construction, is what makes them attractive.
“That’s what excites us about conversions: the immediacy of it. You buy a building and maybe 18 months later you’re renting apartments. That kind of schedule doesn’t exist for land. You’re lucky if it’s year seven that you rent,” he told Bloomberg.
Construction lenders are concerned the incident will affect the popularity of office-to-residential conversions beyond New York City.
“It’s going to make everybody a little more conservative,” Paul Rahimian, CEO of Parkview Financial, a real estate lender that has financed both office-to-residential and hotel-to-residential projects, told Fox News. “Maybe we do the easy ones, but we don’t do the super complex ones.”
