When Governor Kathy Hochul signed the 467-m office-to-residential conversion tax abatement into law last October, the policy’s architects expected the program to seed the redevelopment of Class B office stock in Lower Manhattan and the Garment District. Seven months in, the data is telling a different story: Long Island City is the single largest beneficiary.

According to a review of Department of Buildings filings completed by Breaking New York, seven LIC projects totaling 4,200 residential units have submitted conversion permits since October 1, 2025. The figure is roughly twice the equivalent count for any other neighborhood, including FiDi (3 projects, 2,180 units) and Times Square South (2 projects, 1,250 units).

“There’s a structural reason this is happening in Long Island City and not Lower Manhattan,” said Adam Frazier, head of office capital markets at Cushman & Wakefield’s Queens office. “Class B floor plates here are 28,000 square feet on average — wider than what works in 1920s Lower Manhattan towers.”

The seven projects

The largest is Court Square Tower II, a 1,180-unit conversion at 24-01 44th Drive, filed by RXR Realty in November. The 28-story building, originally built in 1985 as a Citibank back-office facility, will be reconfigured into 1,180 units across studios, one-bedrooms, and two-bedrooms. RXR confirmed in March that 25 percent of the units will meet the 467-m’s mandatory affordability requirement at 60 percent of Area Median Income.

The second-largest is The Manning at Hunters Point, a 920-unit conversion at 27-08 Jackson Avenue filed by Tishman Speyer in January. The remaining five projects range from 280 units (a Daniels Real Estate filing at 30-30 Thomson Avenue) to 760 units (a Brookfield filing at 22-12 Jackson Avenue). All seven have targeted Q4 2027 to Q3 2028 occupancy.

Why Long Island City

LIC office vacancy hit 28.4 percent in Q1 2026, per CBRE’s quarterly tracker — the highest of any major submarket in the five boroughs. Lower Manhattan, by comparison, is at 19.1 percent. Higher vacancy means lower acquisition basis for conversion buyers.

Most LIC office stock was built between 1985 and 2010 to serve back-office tenants who wanted large, column-free floor plates. Those plates convert to multi-unit residential more efficiently than the deep, narrow plates of older Manhattan office towers. “We can hit 76 percent efficient layouts here. In Class B Midtown stock, we’re closer to 62 percent,” Frazier said.

The capital stack question

All seven projects need to close construction financing in the next 12 months to hit their stated occupancy timelines. Four of the seven sponsors confirmed their senior debt commitments are in place; the other three are still in negotiation with what one sponsor called “the same five lenders everyone is talking to” — Wells Fargo, JPMorgan, Bank OZK, MidCap Financial, and Square Mile Capital.