Chair Lee on Class A office parcel decline and conversion trends
Lee asks about a 4% decline in Class A office parcels and whether it signals office-to-residential conversion trends. Commissioner Lee says only 3 of 30 known office-to-residential conversions were Class A buildings, with most conversions going to other Class 4 uses, and the impact on class shares will be minimal.
And then one last area before I pass it off to colleagues is decline in Class A office parcels on FY27 final roll.
So the final assessment roll shows a roughly 4% decline in the number of Class A office parcels, creating a loss of a little more than 7 million square feet of Class A office space,
which results in a 1.5% decrease in taxable assessed value for this property class.
And these declines are outpacing...
The declines outpaced declines seen in the Class B office category, a class of office space that has been particularly well suited for office to residential conversions over the last couple years.
So as we continue to see a flight to quality in the office market in Manhattan, does the reduction in Class A office space reflect a new trend in the office to residential conversion pool?
I think it might be a little bit difficult to predict.
Like we can't really presume some of these trends based on sort of like one year's worth of data.
And across all these sort of building categories, fewer than half of the conversions were actually to residential use.
Most of these conversions were into other tax, you know, class four uses like retail, hotel, warehouses, whatever it might be.
Of the 30 office buildings that we do know that were converted to residential, only three were in the Class A office buildings.
Three?
Yeah, only three were actually in the Class A office buildings of the 30 office buildings that we do know were converted to residential.
Okay, and so how much more square footage do you expect Class A office space to lose in future assessment roles, and how does this adjust the makeup of what each property tax class may pay of the levy each year?
So it is a little bit difficult to speculate based on just one year.
We'll continue to monitor this market.
The overall market.
value of tax class four property has been growing over the last couple years, so the loss of office buildings that occurred, we don't really think there'll be a huge impact.
The impact will probably be minimal to the class shares.
But either way, we'll continue to monitor the conversions.
Okay, perfect.