In a major milestone for urban redevelopment, New York City marked the full leasing of 25 Water Street’s 1,300 new apartments on June 20, 2025. The building, once a mid-century office tower in the Financial District, has been completely transformed into a state-of-the-art residential complex, symbolizing the nation’s largest office-to-residential conversion to date. The project, branded as SoMA (South Manhattan), underscores a broader shift in how cities are reimagining unused commercial real estate to meet growing housing needs.
Originally constructed in 1969, the former office building once housed major tenants including JPMorgan Chase and the New York Daily News. Following a rapid decline in office occupancy during the COVID-19 pandemic and the resulting rise in vacancies, developers began rethinking the utility of aging downtown towers. Construction at 25 Water Street began in mid-2023, with developers GFP Real Estate, Metro Loft, and Rockwood Capital leading the charge. Leasing began in early 2025, and the final units were claimed this June.
The redeveloped building now features a comprehensive suite of luxury amenities designed to appeal to a wide range of tenants. Among the highlights are indoor and outdoor pools, a full-service spa, fitness centers, game lounges, pickleball courts, artist studios, and large communal lounges. In total, over 100,000 square feet of space has been reimagined to foster community and modern urban living.
A key driver behind the project’s success was New York State’s 467-m tax exemption program, a relatively new incentive designed to encourage the adaptive reuse of underutilized commercial properties. The program allows for a significant reduction in property taxes for qualifying conversions, especially when affordable housing units are included. 25 Water Street became the flagship project under this policy, setting a precedent for how government incentives can effectively stimulate urban housing development.
The inclusion of affordable housing has been a central component of the redevelopment. A lottery launched in March 2025 offered more than 300 units at significantly reduced rates, starting at around $932 for studios. These units are aimed at low- and moderate-income New Yorkers, providing access to downtown housing in a market where average rents can easily exceed $4,000 per month. By integrating affordable units into a luxury development, SoMA presents a more inclusive model for urban revitalization.
The rapid conversion and lease-up of 25 Water Street illustrates the growing appeal of commercial-to-residential redevelopment in large U.S. cities. With remote work reshaping demand for office space and housing shortages persisting in many metropolitan areas, this approach is increasingly seen as a win-win. It relieves office vacancy pressures while simultaneously addressing housing demand—particularly in dense, high-cost cities like New York.
City officials have embraced the model as part of broader housing policy goals. Mayor Eric Adams’ administration has emphasized the importance of adding 500,000 new housing units over the next decade, with office conversions playing a critical role. The success of SoMA supports the city’s argument for expanding zoning flexibility and tax incentives for similar projects.
Across New York, additional office-to-residential conversions are underway or in planning stages. Buildings such as 5 Times Square and 111 Wall Street are poised to follow SoMA’s example. In total, city planners estimate that up to 136 million square feet of commercial space could be eligible for conversion under expanded policies, potentially generating tens of thousands of new homes.
While these projects come with challenges—including compliance with modern building codes, ensuring adequate light and air, and retrofitting aging infrastructure—the SoMA redevelopment demonstrates that with the right policy support and design ingenuity, such transformations are not only feasible but highly effective.
As cities across the country look to address chronic housing shortages and rethink their downtowns in a post-pandemic era, New York’s 25 Water Street stands as a model for what adaptive reuse can achieve. By combining public incentives with private investment and architectural innovation, it offers a glimpse into the future of urban development.