Zoning Change Allows Conversion of Ground Floor Nonresidential Uses to Residential Uses

As discussed in previous Holland & Knight alerts on Dec. 10 and Dec. 18, 2024, New York City recently made comprehensive changes to its Zoning Resolution, known collectively as City of Yes for Zoning for Housing Opportunity (COYHO). The amendments are intended to stimulate the production of additional housing through a variety of reforms – including allowing more density in the form of affordable housing, easing many parking requirements, permitting accessory dwelling units and facilitating conversion of existing buildings to residential uses.

One of the more obscure and less discussed provisions in COYHO fundamentally changes the zoning treatment for many older residential buildings. Previously, many of these buildings were prohibited from converting a vacant ground-floor unit, such as a doctors' office or other nonresidential use, to an apartment. This is because the 1961 Zoning Resolution reduced the maximum permitted bulk in many areas of the City, causing older buildings constructed under the pre-1961 zoning regulations to be considered "overbuilt." These overbuilt buildings are classified under the Zoning Resolution as legal, noncomplying structures, meaning they could not add any additional residential floor area because that would make them even further noncompliant (or to use zoning speak, it would increase the degree of noncompliance).

The consequence of these old regulations has been that many buildings, particularly cooperative apartment buildings that were the predominant form of multifamily homeownership housing in the pre-1961 period, have been unable to adapt to changing circumstances. For example, as the medical profession has moved away from individual practitioners working in their own offices, the demand for doctors' offices has diminished, leaving many buildings with empty ground floor space. 

Under the new COYHO provisions, existing overbuilt and primarily residential buildings will now have the opportunity to convert nonresidential ground floor spaces, such as doctors' offices, to apartments. The Zoning Resolution now allows any buildings with at least 75 percent of the existing floor area used for residential purposes to convert nonresidential floor spaces to residential units – without regard to the maximum floor area allowances otherwise permitted on the property. These conversions can be done without any discretionary approvals by the City and provide an exciting opportunity for many buildings to turn these uneconomical spaces into valuable apartments.

For more information about how these changes may impact your building, please reach out to the authors or Stuart Saft, leader of Holland & Knight's New York City Real Estate Practice Group.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.